The main purpose of the liquidation account is to:

Question

Quizplus · Accepted Answer

The main purpose of the liquidation account is to calculate the deficiency or surplus on liquidation, which is the difference between the amount realized from the sale of assets and the amount owing to creditors and shareholders. This account shows the final outcome of the liquidation process and is used to determine the amount each class of contributory will receive, if any. Option A is incorrect because additional calls made on shareholders would be recorded in a separate account. Option B is also incorrect as the capital amount due to contributories would be shown in the contributories account. Option D is partially correct, as the liquidation account will ultimately show the final cash payment to each class of contributory, but this is not its main purpose.

The Main Purpose of the Liquidation Account Is To