Yellow Corp. issues 10% bonds. Not including any indirect effects on earnings, the issuance will immediately decrease Yellow's:
A)Option a
B)Option b
C)Option c
D)Option d

Question

Yellow Corp. issues 10% bonds. Not including any indirect effects on earnings, the issuance will immediately decrease Yellow's: 
A)Option a 
B)Option b 
C)Option c 
D)Option d

Quizplus · Accepted Answer

The issuance of 10% bonds will increase the liabilities of Yellow Corp., leading to a decrease in equity (assets - liabilities = equity). Therefore, the correct option is C, which represents a decrease in equity.