Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

9. Current Liabilities

Types of Liabilities

Financial Accounting

9. Current Liabilities

Types of Liabilities

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Multiple Choice

Which of the following types of liens typically has the highest priority in the event of liquidation?

Tax lien

Judgment lien

Mechanic's lien

Mortgage lien

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Verified step by step guidance

Understand the concept of a lien: A lien is a legal claim or right against a property that allows the holder to secure payment for a debt or obligation. Different types of liens have varying levels of priority in the event of liquidation.

Review the priority hierarchy of liens: In financial accounting and liquidation scenarios, certain liens are given higher priority by law. Tax liens, for example, are often prioritized because they represent obligations to the government.

Analyze the types of liens provided: Tax lien refers to unpaid taxes owed to the government, judgment lien arises from court judgments, mechanic's lien is related to unpaid work or materials for property improvement, and mortgage lien is tied to loans secured by real estate.

Consider the legal precedence: Tax liens typically have the highest priority because governments are granted superior rights to collect unpaid taxes before other creditors. This is a standard practice in liquidation proceedings.

Conclude the reasoning: Based on the hierarchy and legal precedence, tax liens are generally prioritized over other types of liens, such as judgment liens, mechanic's liens, and mortgage liens, in the event of liquidation.