When a company issues common stock for cash,what is the effect on the accounting equation for the company?
A)Assets increase and liabilities increase.
B)Assets increase and stockholders' equity increases.
C)Assets decrease and liabilities decrease.

Question

Quizplus · Accepted Answer

When a company issues common stock for cash, the company receives an increase in assets (cash) and an increase in stockholders' equity (common stock), resulting in the accounting equation being balanced. There is no change in liabilities since common stock represents ownership in the company, not a debt obligation.

When a Company Issues Common Stock for Cash,what Is the Effect