Which major group of accounts represents residual interest in the assets of a company after deducting liabilities?

The correct answer is equity. Equity represents the residual interest in the assets of a company after all liabilities have been deducted. It encompasses the ownership interest held by shareholders, including common stock, preferred stock, retained earnings, and other comprehensive income. When a company’s total assets are calculated, and all its obligations or liabilities are subtracted from this figure, the remaining amount is defined as equity. This reflects the net worth of the company as owned by its shareholders.

In contrast, assets represent what the company owns, liabilities indicate what it owes, and expenses denote the costs incurred in the operation of the business. While all these elements play vital roles in the overall financial picture, it is equity that specifically addresses the ownership claim over the company’s resources after satisfying creditor claims.