After the completion of all steps in the issue of shares, the company's statement of financial position will show which of the following changes?
A) Assets increased, liabilities increased
B) Assets decreased, equity increased
C) Assets decreased, liabilities decreased
D) Assets increased; equity increased

Question

Quizplus · Accepted Answer

Issuing shares involves raising funds by selling ownership in the company to investors. This increases the company's assets in the form of cash received from the sale of shares. At the same time, there is no change in the company's liabilities, since no debt is incurred. As a result, the company's equity increases by the amount of funds raised from the sale of shares, which is reflected in the statement of financial position. Therefore, the correct answer is D - Assets increased; equity increased.

After the Completion of All Steps in the Issue of Shares