Transactions affecting Stockholders' Equity include:
A)sale of common stock and payment of expenses.
B)revenues and purchase of supplies on account.
C)purchase of land and a sale on account.
D)payment of a liability and payment of expenses.

Question

Quizplus · Accepted Answer

The sale of common stock affects stockholders' equity because it increases the amount of capital contributed by the stockholders. Payment of expenses, on the other hand, reduces stockholders' equity by decreasing the company's assets. Revenues and purchase of supplies on account are transactions that affect assets and liabilities, but not stockholders' equity. Purchase of land and a sale on account are also transactions that affect assets and liabilities, but not stockholders' equity. Payment of a liability and payment of expenses have the same effect as payment of expenses alone, which reduces stockholders' equity.

Transactions Affecting Stockholders' Equity Include