Chapter 4, Problem 18Q

(a)

To determine

Owner’s equity: Stockholder’s equity or owner’s equity includes common stock and retained earnings. This account basically shows the investment of the owners of the business. In a sole proprietorship business, this classification includes only one account.

To identify: The term used to describe the owner’s equity section of a corporation.

(b)

To determine

To identify: The two owner’s equity accounts in a corporation and indicate the purpose of each.