ABC Company issued additional shares of stock for cash. The effect of the transaction is
A) the earnings per share increased.
B) the current ratio was increased.
C) the debt-to-equity ratio increased.
D) the return on total assets increased.

Question

Quizplus · Accepted Answer

Issuing additional shares of stock for cash increases the company's current assets (cash) without immediately affecting current liabilities, thus increasing the current ratio, which measures a company's ability to pay short-term obligations.

ABC Company Issued Additional Shares of Stock for Cash