Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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When is liquidation deemed to have started?

When the court approves it
When a petition is first presented
When the company halts operations
When the liquidator is appointed

The correct answer is: When a petition is first presented

Liquidation is deemed to have started when a petition is first presented. This point is crucial because the act of presenting a petition signifies that the process of dissolving the company is officially underway. It reflects the intention to liquidate and serves as a formal notice that the company's financial obligations and operational status will be reviewed. Once the petition is filed, it creates a legal framework for the outstanding liabilities and assets to be addressed, regardless of any subsequent actions, such as court approval or the appointment of a liquidator. This initial step establishes the timeline for the liquidation process and triggers the legal rights of creditors. Although the court's approval or the appointment of a liquidator are important steps in the liquidation process, they occur after the petition is filed, indicating that the first presentation is indeed the defining moment when liquidation starts.