Equity segment of a corporate balance sheet, Accounting Basics

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Q. Equity segment of a corporate balance sheet?

The stockholders' equity segment of a corporate balance sheet can become more complex as you will see later in the text. But the items in the owner's equity section of the balance sheets of a sole proprietorship and a partnership always remain as just shown. In a solitary proprietorship the owner's capital balance consists of the owner's investments in the business plus cumulative net income since the starting of the business less any amounts withdrawn by the owner.

Therefore all of the amounts in the various stockholders' equity accounts for a corporation are in the owner's capital account in a single proprietorship. In a partnership every partner's capital account balance consists of that partner's investments in the business plus that partner's cumulative share of net income since that partner became a partner less any amounts withdrawn by that partner.

The Dividends account in a corporation is alike to an owner's drawing account in a single proprietorship. These accounts both illustrate amounts taken out of the business by the owners. In a partnership every partner has a drawing account. Accountants treat liability, asset, revenue and expense accounts similarly in all three forms of organization.


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