Which of the following transactions will increase Stockholders' Equity?
A)The company pays a dividend to its shareholders.
B)The company issues common stock to new shareholders.
C)The company purchases equipment.
D)The company makes a payment on account.

Question

Quizplus · Accepted Answer

Issuing common stock to new shareholders will increase stockholders' equity as it represents an increase in the amount of ownership the shareholders have in the company. Option A is incorrect as paying dividends decreases stockholders' equity by distributing the company's earnings to shareholders. Option C and D are incorrect as they are not related to stockholders' equity.

Which of the Following Transactions Will Increase Stockholders' Equity