Which account is treated as a contra account to total Owners' Equity?

The correct choice is the account that is recognized as a contra account to total Owners' Equity. When looking at the components of Owners' Equity, accounts typically represent ownership interests, accumulated profits, or losses. A contra account, however, reduces the total balance of the associated account.

In this case, Treasury Stock is a specific type of stock that a company buys back from its shareholders. When a company repurchases its own shares, these shares are held in the Treasury and are not considered when computing total equity. Thus, Treasury Stock directly decreases the total Owners' Equity on the balance sheet. This is why it is classified as a contra account: it effectively offsets the equity that the company has issued to its shareholders.

In contrast, Accumulated Depreciation, while a contra asset account, serves to reduce the value of property, plant, and equipment, not Owners' Equity. Dividends Declared is a liability representing the dividends that will be paid to shareholders but doesn’t reduce equity until they are paid out. Sales Returns are reductions in revenue and do not have a direct bearing on equity accounts but rather affect income statements. Therefore, Treasury Stock is the only account that serves to directly decrease total Owners' Equity, affirming its position as