Bubble Wraps Company receives cash from a stockholder,John Trent,and issues common stock to him.The two accounts involved in this transaction are ________.

Question

Quizplus · Accepted Answer

When a company receives cash from a stockholder and issues common stock to him, the two accounts involved are Cash (which increases) and Common Stock (which also increases). Option A is incorrect because Accounts Payable is a liability account that represents money owed to suppliers or creditors, and this transaction does not involve any liabilities or payments. Option C is incorrect because Accounts Payable is not involved, and Common Stock is a component of Shareholders' Equity, representing the owners' investment in the company. Option D is incorrect because Accounts Receivable is an asset account that represents money owed to the company by customers or debtors, and it is not involved in this transaction.

Bubble Wraps Company Receives Cash from a Stockholder,John Trent,and Issues