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Introduction to Financial Statements

Salary payabl...

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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Q. Section 2(54) of the Companies Act, 2013, defines 'managing director'. It stipulates that a "managing director" means a director who, by virtue of the_______of a company or an._______with the company or a______passed in its general meeting, or by its Board of Directors, is entrusted with substantial powers of management of the affairs of the company and includes a director occupying the position of managing director, by whatever name called.

Q. No company shall appoint or continue the employment of any person as a managing director, whole time director or manager, who is __________.

Q. Solve.
X is employed as a managing director in a company. After he rendered service for sometime it is found that the Board of Directors was not competent to appoint him as such. Can X anything from the company?

State the following statement is True of False.

The Managing Director is whole time Director of a company.

The directors are agents, trustees and managing partners of a company.

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