A corporation generated assets by issuing equity securities and through profitable operations. Which effects likely occurred?
A)Common stock and retained earnings increased.
B)Common stock increased and retained earnings stayed the same.
C)Retained earnings increased, and there was no effect on common stock.
D)Liabilities and common stock increased.

Question

Quizplus · Accepted Answer

When a corporation issues equity securities, common stock increases. Additionally, when a corporation generates profits, these profits accumulate in retained earnings. Therefore, both common stock and retained earnings would increase in this scenario.

A Corporation Generated Assets by Issuing Equity Securities and Through