A company issues $20 million in new stock.It later uses this money to pay off promissory notes.How many different accounts and which account names are affected by these two transactions?
A)3 accounts are affected: contributed capital,cash,and notes payable.
B)4 accounts are affected: contributed capital,cash,liabilities,and accounts payable.
C)3 accounts are affected: cash,assets,and accounts payable.
D)3 accounts are affected: contributed capital,investments,and accounts payable.

Question

Quizplus · Accepted Answer

The first transaction of issuing new stock affects two accounts: contributed capital (increase) and cash (increase). 
The second transaction of paying off promissory notes affects two accounts: cash (decrease) and notes payable (decrease). Therefore, a total of three accounts are affected: contributed capital, cash, and notes payable. Option A is the only one that includes all three of these accounts.

A Company Issues $20 Million in New Stock