A company issues $20 million in new stock.The company later uses this money to acquire a building.What is the effect of these two transactions on the company's accounts?
A)Buildings increases and Common Stock increases.
B)Buildings increases and Common Stock decreases.
C)Cash increases,Buildings increases,and Common Stock increases.
D)Cash decreases,Buildings increases,and Common Stock decreases.

Question

Quizplus · Accepted Answer

Receiving cash from the issuance of stock increases both Cash and Common Stock.Using the cash to acquire a building causes the Cash account to decrease and the Buildings account to increase.The Cash account is increased and decreased by equal amounts.As such,taken together,these two transactions increase the Buildings account and increase the Common Stock account.

A Company Issues $20 Million in New Stock