Every stockholder in a corporation will have a drawing account that will be closed to retained earnings during the closing process.

Question

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Stockholders in a corporation do not typically have drawing accounts. Drawing accounts are used in partnership and sole proprietorship structures to track the owner's personal withdrawals from the business. Instead, when a corporation's accounts are closed at the end of an accounting period, any dividends declared by the board of directors are closed to retained earnings.

Every Stockholder in a Corporation Will Have a Drawing Account