Chico Company experienced an accounting event that affected its financial statements as indicated below: Which of the following accounting events could have caused these effects on Chico's statements?
A) Issued common stock.
B) Earned cash revenue.
C) Borrowed money from a bank.
D) Paid a cash dividend.

Question

Chico Company experienced an accounting event that affected its financial statements as indicated below:  Which of the following accounting events could have caused these effects on Chico's statements?
A) Issued common stock. 
B) Earned cash revenue. 
C) Borrowed money from a bank. 
D) Paid a cash dividend.

Quizplus · Accepted Answer

Issuing common stock would increase assets (cash) and increase equity (common stock). It would not affect net income, but would be reported as a cash inflow from financing activities on the statement of cash flows.

Chico Company Experienced an Accounting Event That Affected Its Financial