Question

A company is about to be closed down as it does not possess enough funds to pay for its debts. The business, therefore, places a low value on its inventory. Which concept is the business complying with?

Answer 1

The business is complying with the Liquidation concept.

Step-by-step explanation:

Liquidation in most cases is a concept in business that happens when a company sells off its inventory lower than their cost price because the company is about to be closed down.

It is usually to generate cash within a short period of time to pay off debts or creditors.