Question

Partnership capital and drawing accounts are similar to the corporate:

a. paid-in capital, retained earnings, and dividends accounts
b. retained earnings account
c. paid-in capital and retained earnings accounts
d. preferred and common stock accounts

Answer 1

Partnership capital and drawing accounts are analogous to corporate paid-in capital, retained earnings, and dividends accounts, reflecting invested equity, accumulated earnings, and distributed earnings, respectively.

Step-by-step explanation:

The question is asking which corporate accounts are similar to partnership capital and drawing accounts. The correct answer is a. paid-in capital, retained earnings, and dividends accounts. In a partnership, capital accounts reflect each partner's equity in the business, while drawing accounts represent the withdrawals partners make from their capital for personal use. Similarly, in a corporation, the paid-in capital account reflects the equity shareholders invest in the company, the retained earnings account represents the accumulation of a company's profits that have not been distributed as dividends, and dividends accounts represent the earnings distributed to shareholders.