The sale of common shares should be recorded as a
A)debit to Retained Earnings and a credit to Cash.
B)debit to Cash and a credit to Retained Earnings.
C)debit to Cash and a credit to Common Shares.
D)debit to Common Shares and a credit to Cash.

Question

Quizplus · Accepted Answer

The sale of common shares increases the cash a company has (debit to Cash) and increases the equity of the company through common shares (credit to Common Shares). This reflects the inflow of cash and the issuance of shares.

The Sale of Common Shares Should Be Recorded as a