Eagle Eye, Inc., a corporation, received an additional investment of $6,000 cash in exchange for shares of common stock.How does this transaction affect Eagle Eye's accounts?
A) Increase in stock expense and decrease cash by $6,000 each
B) Increase common stock and increase cash by $6,000 each
C) Increase common stock and increase revenue by $6,000 each
D) Increase common stock and decrease retained earnings by $6,000 each

Question

Quizplus · Accepted Answer

The transaction involves receiving an investment in exchange for shares of common stock. This means that Eagle Eye's common stock account will increase by $6,000, reflecting the additional stock issued. At the same time, the company receives cash of $6,000, so the cash account will also increase by that amount. Therefore, the correct answer is option B. The other choices are incorrect because they do not accurately reflect the nature of the transaction.