When a company has an initial public offering [blank].

Question

Quizplus · Accepted Answer

When a company has an initial public offering (IPO), it sells shares of its ownership to the public for the first time. The proceeds of the sale are received by the company and become part of its equity, which is the portion of the company's assets that belongs to the shareholders. Therefore, the correct choice is that the proceeds of the sale will increase the company's equity (choice C). The other choices are incorrect because the previous owner of the shares does not receive the money (choice A), the proceeds do affect the company's balance (choice B), and the proceeds do not become a liability payable to the shareholders (choice D).

When a Company Has an Initial Public Offering [Blank]