Question

State true of false :

Solvent person is a person whose assets are more than his liabilities.

• A. True
• B. False

Answer 1

The correct option is A True

The term solvency means that a company is able to pay its obligations when they come due and that a company is able to continue in business. Some people look to company's working capital in deciding whether a company is solvent. They conclude a company with a positive amount of working capital is solvent. In other words a company that is solvent has more current assets than current liabilities.