An owner makes an investment of cash into the business and receives shares of stock.This transaction is recorded as a:
A)debit to Common Stock and a credit to Cash.
B)debit to Cash and a credit to Common Stock.
C)debit to Cash and a credit to Retained Earnings.
D)debit to Cash and a credit to Stockholder Revenue.

Question

Quizplus · Accepted Answer

When an owner makes an investment of cash into the business and receives shares of stock, it is recorded as a debit to Cash because cash is being received and a credit to Common Stock because the owner is being issued new shares of stock in exchange for their investment. This increases the company's equity and does not affect retained earnings or stockholder revenue.

An Owner Makes an Investment of Cash into the Business