Definition of deficiency account. : an account supplementing the balance sheet of a financially weak enterprise showing estimated realization values of assets and their insufficiency to meet creditors' claims and occasionally indicating the causes of the difficulty.

Deficiency Account:

A deficiency account is a type of account that is created during the liquidation process of a company. It is used to record any remaining liabilities or losses that cannot be covered by the company's assets. In other words, when a company is unable to pay off all of its debts and obligations, a deficiency account is created to represent the shortfall.

Surplus Account:

On the other hand, a surplus account is created when a company has more assets than liabilities during the liquidation process. It is used to record any excess funds or assets that remain after all liabilities have been settled. The surplus account represents the additional value that can be distributed to the company's shareholders or owners.

Liquidator's Final Statement of Account:

The liquidator's final statement of account is a document prepared by the liquidator at the end of the liquidation process. It provides a detailed summary of the financial transactions and activities that occurred during the liquidation, including the creation of deficiency and surplus accounts.

The final statement includes the following information:

1. Liabilities and claims: The liquidator lists all the outstanding debts and obligations of the company that need to be settled. This includes payments to creditors, employees, and any other parties with valid claims against the company.

2. Assets: The liquidator provides a detailed inventory of the company's assets, including cash, investments, inventory, and other tangible or intangible assets. The value of these assets is used to determine if there is a surplus or a deficiency.

3. Deficiency account: If the liabilities exceed the assets, the liquidator creates a deficiency account to represent the shortfall. This account records the remaining liabilities that cannot be paid off by the company's assets.

4. Surplus account: If the assets exceed the liabilities, the liquidator creates a surplus account to represent the excess funds or assets. This account records the additional value that can be distributed to the company's shareholders or owners.

5. Distribution plan: The liquidator outlines a distribution plan for any remaining funds or assets. This plan specifies how the surplus, if any, will be distributed among the shareholders or owners of the company. It also explains how the deficiency, if any, will be handled and if there are any funds available for distribution.

In conclusion, the deficiency account represents the remaining liabilities that cannot be covered by the company's assets, while the surplus account represents the excess funds or assets that remain after settling all liabilities. The liquidator's final statement of account provides a comprehensive summary of the financial transactions and activities during the liquidation process, including the creation of deficiency and surplus accounts.