A company issues $20 million in new stock.It later uses the cash received to pay off promissory notes.What accounts are affected by these two transactions?
A) Common Stock, Cash, and Notes Payable.
B) Common Stock, Cash, Investments, and Notes Payable.
C) Cash, Common Stock, and Accounts Payable.
D) Common Stock, Investments, and Notes Payable.

Question

Quizplus · Accepted Answer

The issuance of $20 million in new stock will increase the Common Stock account and the Cash account. The payment of promissory notes will decrease the Notes Payable account, and since it was paid in cash, it will also decrease the Cash account. Therefore, the affected accounts are Common Stock, Cash, and Notes Payable.

A Company Issues $20 Million in New Stock