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 in 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.