All of the following are primary events that typically lead to changes in book value of shareholders' equity except :
A) Investments by shareholders, usually net cash received by the company at equity issue date.
B) Profitable operating and investing activities, with net income being a large component of this increase.
C) Debtholders requiring firms to enter into debt covenants.
D) Distributions to shareholders, usually in the form of periodic cash dividend payments to investors and sometimes in the form of share repurchases.

Question

Quizplus · Accepted Answer

Debtholders requiring firms to enter into debt covenants may affect the company's ability to take certain actions that could increase book value of shareholders' equity, but this does not directly lead to changes in book value. The other options listed (A, B, and D) are all primary events that can directly affect changes in book value of shareholders' equity.

All of the Following Are Primary Events That Typically Lead