Consider the following transactions: Issued common stock for cash.Purchased equipment by signing a note payable.Paid rent for the current month.Collected cash from customers on account.How many of these four transactions increased the given company's total assets?
A)One.
B)Two.
C)Three.

Question

Quizplus · Accepted Answer

The two transactions that increased the company's total assets are issuing common stock for cash and purchasing equipment by signing a note payable. These transactions both involve an increase in the company's assets: cash for the stock issuance and equipment for the note payable. Paying rent and collecting cash from customers do not result in an increase in total assets, as the former is simply a reduction in liabilities and the latter is a conversion of accounts receivable (an asset) to cash (also an asset), resulting in no net increase.

Consider the Following Transactions: Issued Common Stock for Cash