Which of the following transactions will not change a company's total stockholders' equity? A)Reporting of net income. B)Issuing stock to stockholders in exchange for cash. C)The declaration of a cash dividend. D)The purchase of a factory building.

Question

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The purchase of a factory building is a non-operating activity that affects the asset side of the balance sheet and the corresponding liability or equity account. It does not directly affect the stockholders' equity. However, A, B, and C all directly affect stockholders' equity. Reporting net income increases retained earnings, which is a component of stockholders' equity. Issuing stock to stockholders in exchange for cash increases the common stock account and, therefore, increases total stockholders' equity. Declaring a cash dividend reduces retained earnings and, therefore, decreases total stockholders' equity.

Which of the Following Transactions Will not Change a Company's