If a person starting a business had an investment of a building, valued at $300,000 with an $180,000 outstanding mortgage and issued stock for the balance, the effect would be to:
A)increase assets by $120,000.
B)increase assets by $180,000.
C)increase stockholders' equity by $120,000.
D)increase stockholders' equity by $300,000.

Question

Quizplus · Accepted Answer

The building is an asset valued at $300,000, and the mortgage is a liability of $180,000. The difference, $120,000, represents the equity or the value of the stock issued, thus increasing stockholders' equity by $120,000.

If a Person Starting a Business Had an Investment of a Building