If a company issues 25,000 ordinary shares which are sold at $4 per share, the effect on the accounting equation is:

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When a company issues 25,000 ordinary shares at $4 per share, the total amount received will be $100,000. This increases the cash balance by $100,000. Since these are ordinary shares, they represent equity and their issuance leads to an increase in shareholders' equity by the same amount, i.e. $100,000. Therefore, the effect on the accounting equation is an increase in both assets (cash) and equity (shareholders' equity), with no impact on liabilities. Option A and B are not correct because the issuance of shares does not impact liabilities, and Option D is not correct because it does have an impact on the accounting equation.

If a Company Issues 25,000 Ordinary Shares Which Are Sold