Blake and Ryan each invest $30,000 in a business and are given shares of stock in Jones Industries as evidence of their ownership interests.For this transaction,identify the effect on the accounting equation.
A)Assets increase and liabilities increase.
B)Assets increase and stockholders' equity increases.
C)Liabilities increase and stockholders' equity decreases.
D)Liabilities decrease and assets decrease.

Question

Quizplus · Accepted Answer

When Blake and Ryan invest $30,000 each, the assets of the business increase by $60,000 (cash), and the stockholders' equity also increases by $60,000 (common stock issued to Blake and Ryan). Liabilities are not affected by this transaction, so options A, C, and D are incorrect.

Blake and Ryan Each Invest $30,000 in a Business and Are