Jennifer liquidates her catering business. she is left with $20,000 after selling all the assets and settling the liabilities. in this case, the amount of $20,000 represents the _____.
The $20,000.00 proceed after selling the assets and settling all the liabilities is represents Jennifer's equity or in accounting term, the owner's equity. Jennifer's equity represents the amount of assets deducted to liabilities' amount.
Liquidation occurs when a business comes to an end where its assets are distributed to claimants. In this case, the assets are used to pay creditors and shareholders’ depending on the level of their claims. The assets can include land, machinery or fittings.
