How will stockholders' equity and net income be affected by the issuance of stock warrants to employees under a noncompensatory stock option plan? $\begin{array}{lll}
& \text {Stockholders Equity}& \text {Net Income}\
\text { I. } & \text { no effect } & \text { no effect } \
\text { II. } & \text { no effect } & \text { decreased } \
\text { III. } & \text { decreased } & \text { decreased }\
\text { IV. } & \text { decreased } & \text { no effect }
\end{array}$

A)I
B)II
C)III
D)IV

Question

How will stockholders' equity and net income be affected by the issuance of stock warrants to employees under a noncompensatory stock option plan? $\begin{array}{lll}
& \text {Stockholders Equity}& \text {Net Income}\
\text { I. } & \text { no effect } & \text { no effect } \
\text { II. } & \text { no effect } & \text { decreased } \
\text { III. } & \text { decreased } & \text { decreased }\
\text { IV. } & \text { decreased } & \text { no effect } 
\end{array}$

A)I
B)II
C)III
D)IV

Quizplus · Accepted Answer

Issuing stock warrants under a noncompensatory stock option plan does not affect net income, as it is not considered an expense. It will, however, increase stockholders' equity as additional shares are being issued.

How Will Stockholders' Equity and Net Income Be Affected by the Issuance