Which of the following transactions will increase stockholders' equity?
A)The company pays a dividend to its shareholders.
B)The company issues common stock to new shareholders.
C)The company purchases equipment.
D)The company makes a payment on account.

Question

Quizplus · Accepted Answer

Issuing common stock to new shareholders increases the amount of equity invested in the company, thus increasing stockholders' equity. Paying a dividend to shareholders decreases stockholders' equity, purchasing equipment reduces cash but has no impact on equity, and making a payment on account reduces liabilities but also has no impact on equity.

Which of the Following Transactions Will Increase Stockholders' Equity