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Question

Salary payable to the managing director of the company is treated as _________.

A
Unsecured debt
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B
Preferential debt
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C
Unsecured credits
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D
Liquidation expenses
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Solution

The correct option is C Unsecured debt
Unsecured debt is a debt which is not backed up by an underlying asset, or we can say it is unsecured. Hence, salary payable to managing directors of the company is treated as unsecured debt.

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