The accounting equation is represented by Assets= Liabilities + Stockholders' Equity which of the following would cause a change in the stockholders' equity accounts:
A) Sale of Land for cash and a note receivable for the balance
B) Collection of an account receivable
C) Purchased an asset for cash and 10,000 shares of preferred stock
D) Purchased inventory on account

Question

Quizplus · Accepted Answer

Purchasing an asset for cash and issuing 10,000 shares of preferred stock would cause an increase in both assets (the purchased asset) and stockholders' equity (the issuance of preferred stock). The other options would either only affect assets (selling land for cash and a note receivable, purchasing inventory on account) or only affect liabilities (collection of an account receivable reduces the accounts receivable liability).

The Accounting Equation Is Represented by Assets= Liabilities + Stockholders