Which of the following reflects the impact of a transaction where $200,000 cash was invested by stockholders in exchange for stock?
A)Assets and retained earnings each increased $200,000.
B)Assets and revenues each increased $200,000.
C)Stockholders' equity and revenues each increased $200,000.
D)Stockholders' equity and assets each increased $200,000.

Question

Quizplus · Accepted Answer

When $200,000 cash is invested by stockholders in exchange for stock, the amount of cash (an asset) increases by $200,000, while stockholders' equity (a component of equity) increases by the same $200,000. This means that both assets and stockholders' equity increase by $200,000. Therefore, the correct option is D.

Which of the Following Reflects the Impact of a Transaction