Any subsequent sale of a firm's previously issued common shares from one investor to another (such as occurs on public stock exchanges):
A)increases the recorded amounts of shareholders' equity.
B)decreases the recorded amounts of shareholders' equity.
C)has as no effect on the recorded amounts of shareholders' equity.
D)increases or decreases the recorded amounts of shareholders' equity depending on the facts and circumstances.
E)None of these answer choices is correct.

Question

Quizplus · Accepted Answer

Subsequent sales of a firm's previously issued common shares from one investor to another do not affect the recorded amounts of shareholders' equity, as the equity has already been accounted for in the initial issuance of the shares. Therefore, there is no impact on the recorded amounts of shareholders' equity.

Any Subsequent Sale of a Firm's Previously Issued Common Shares