During corporate liquidation, does liabilities or owner's equity have priority in claims?

**Q: During the liquidation of a company, does liability or owner's equity have priority in claims?**

**A: Based on the fundamental accounting equation "Assets = Liabilities + Owner's Equity," equity includes 1) creditors' equity and 2) owner's equity (or shareholders' equity). Since creditors have priority in claiming assets over owners, the positions of liabilities and owner's equity in the fundamental accounting equation cannot be swapped. This highlights the principle that creditors' claims take precedence over owners' claims during liquidation.**