Which of the following transactions will increase Stockholders' Equity?
A) The company pays a dividend to its shareholders.
B) The company issues common stock to new shareholders.
C) The president of the company buys a new personal automobile.
D) The company makes a payment on account.

Question

Quizplus · Accepted Answer

When a company issues common stock to new shareholders, it is receiving new investment and increasing its equity.

A) This transaction will decrease Stockholders' Equity as the company is paying out money to its shareholders.
C) This transaction has no effect on Stockholders' Equity as it is a personal transaction made by an individual and does not involve the company's accounts.
D) This transaction has no effect on Stockholders' Equity as it is only an accounts payable transaction.

Which of the Following Transactions Will Increase Stockholders' Equity