Question

Of the five major classifications of accounts, the main difference for a corporation occurs in the stockholder's equity classification, where ____ accounts replace owner's ___ accounts.

a) Investor's; shareholder's
b) Shareholder's; investor's
c) Corporate; proprietor's
d) Proprietor's; corporate

Answer 1

The correct answer to the question is c) Corporate; proprietor's, since in a corporation, shareholder's accounts in the equity classification replace a sole proprietorship's owner's equity accounts.

Step-by-step explanation:

The student has posed a question relating to the classifications of accounts in the context of corporate accounting. In a corporation, which is a business owned by shareholders, the equity section of the balance sheet is primarily where distinctions are made from other business forms such as sole proprietorships. The main difference for a corporation occurs in the stockholder's equity classification, where shareholder's accounts replace owner's proprietor's accounts.

The correct answer to fill in the blanks of the student's question is: 'Of the five major classifications of accounts, the main difference for a corporation occurs in the stockholder's equity classification, where shareholder's accounts replace owner's proprietor's accounts.' Therefore, the correct choice is (c) Corporate; proprietor's.