A company issues $50 million in new stock.The company later uses this money to buy construction machinery.How many accounts will be affected by these transactions and which particular account names are most likely to be used to record the effects of these transactions?

Question

Quizplus · Accepted Answer

With the issuance of new stock, the Contributed Capital account will be affected. With the use of the money to buy construction machinery, the Cash account will be affected (as it was used to make the purchase), and the Equipment account will be affected (as it represents the machinery that was purchased). Therefore, only 3 accounts will be affected: Contributed Capital, Cash, and Equipment.

A Company Issues $50 Million in New Stock