The correct answer is: C. Liquidation Account
A liquidation account is a financial statement that shows the assets, liabilities, and equity of a company that is in the process of being dissolved. The account is prepared by the liquidator, who is responsible for winding up the company’s affairs.
The liquidation account starts with the company’s assets, which are listed at their fair market value. The liabilities are then listed, and the total of the liabilities is deducted from the total of the assets to arrive at the company’s net worth. If the company’s net worth is positive, the liquidator will distribute the proceeds to the company’s creditors and shareholders. If the company’s net worth is negative, the liquidator will distribute the proceeds to the company’s creditors, and the shareholders will receive nothing.
Here is a brief explanation of each option:
- List-C: This is the correct answer. A liquidation account is a financial statement that shows the assets, liabilities, and equity of a company that is in the process of being dissolved.
- List-D: This is not the correct answer. A statement of affairs is a financial statement that shows the assets, liabilities, and equity of a company at a specific point in time.
- List-G: This is not the correct answer. A profit and loss account is a financial statement that shows the revenues, expenses, and net income of a company for a specific period of time.
- List-H: This is not the correct answer. A balance sheet is a financial statement that shows the assets, liabilities, and equity of a company at a specific point in time.