Computer Corporation is starting its computer programming business and has sold stock of $15,000.Identify how the accounting equation will be affected.
A) increase in assets (Cash)and increase in liabilities (Accounts Payable)
B) increase in assets (Cash)and increase in Stockholders' Equity

C) increase in assets (Accounts Receivable)and decrease in liabilities (Accounts Payable)
D) increase in assets (Cash)and increase in assets (Accounts Receivable)

Question

Computer Corporation is starting its computer programming business and has sold stock of $15,000.Identify how the accounting equation will be affected.
A) increase in assets (Cash)and increase in liabilities (Accounts Payable)
B) increase in assets (Cash)and increase in Stockholders' Equity
​
C) increase in assets (Accounts Receivable)and decrease in liabilities (Accounts Payable)
D) increase in assets (Cash)and increase in assets (Accounts Receivable)

Quizplus · Accepted Answer

Selling stock generates funds for the business, which increases the asset of cash. At the same time, the sale of stock increases the stockholders' equity as the company now has more investment from the shareholders. Therefore, the accounting equation will be affected by the increase in assets (Cash) and increase in Stockholders' Equity.

Computer Corporation Is Starting Its Computer Programming Business and Has