The issuance of common shares increases both a company's assets and shareholders' equity.

Name: The issuance of common shares increases both a company's assets and shareholders' equity.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

When common shares are issued, the company receives cash or other assets from the shareholders in exchange for the shares. This increases the company's assets, and at the same time, shareholders' equity is also increased by the same amount of cash received. Therefore, both assets and shareholders' equity are increased.

The Issuance of Common Shares Increases Both a Company's Assets