The process of winding up a business normally consist of conversion of a portion or all of the asset into cash, settlement with creditors, and distribution of remaining assets to the ownership group. The conversion of asset into cash is referred to as realization; the payment of claim is referred to as liquidation. The latter is also used in a broader sense to refer to the complete winding up process.
Upon liquidation of a partnership, the accountant must be able to advise as the proper distribution of asset among individual partners. Improper distribution resulting overpayment to certain parties with corresponding loss to the other, may result in personal liability on the part of person or the one authorizing such distribution.
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