The Main Purpose of the Liquidation Account Is To

question 34

Multiple Choice

The main purpose of the liquidation account is to:

• A) record additional calls made on shareholders.
• B) show the capital amount due to contributories.
• C) calculate the deficiency or surplus on liquidation.
• D) show the final cash payment to each class of contributory.

---

Definitions:

Credit Period

The time frame allowed by a creditor for a debtor to pay an outstanding bill or loan without incurring penalties or interest.

Cash Discount

An incentive offered by sellers to purchasers for paying an invoice promptly, usually defined as a percentage reduction in the invoice amount.

EOQ Model

Economic Order Quantity model; an inventory management method used to determine the optimum order quantity that minimizes the total inventory holding costs and ordering costs.

Shortage Costs

Costs that fall with increases in the level of investment in current assets.