Clay and Lora each invest $15,000 in Deyer, Inc. and are given shares of stock as evidence of their ownership interest. What effect does this transaction have on the accounting equation of Deyer?

Question

Quizplus · Accepted Answer

When Clay and Lora invest $15,000 each in Deyer, Inc., the assets of the company (cash) increases by $30,000 (15,000+15,000). At the same time, the ownership interest of the owners increases by $30,000 in the form of contributed capital, which is a part of the equity of the company. Therefore, this transaction increases both assets and contributed capital, choice B.

Clay and Lora Each Invest $15,000 in Deyer, Inc