Transactions affecting stockholders' equity include
A) shares of capital stock issued to stockholders and payment of liabilities
B) shares of capital stock issued to stockholders, dividends declared and paid to stockholders, revenues, and expenses
C) shares of capital stock issued to stockholders, revenues, expenses, and collection of accounts receivable
D) dividends declared and paid to stockholders, revenues, expenses, and purchases of supplies on account

Question

Quizplus · Accepted Answer

Transactions that affect stockholders' equity are transactions that impact the owners' claims on the company's assets. Shares of capital stock issued to stockholders and dividends declared and paid to stockholders are both examples of transactions that impact stockholders' equity. Revenues and expenses also affect stockholders' equity indirectly by increasing or decreasing the company's profitability, which in turn affects the value of stockholders' equity. However, payment of liabilities and collection of accounts receivable are not directly related to stockholders' equity but instead affect the company's assets and liabilities. Purchases of supplies on account also do not specifically affect stockholders' equity but would impact the company's expenses and therefore indirectly affect profitability and stockholders' equity.

Transactions Affecting Stockholders' Equity Include