A Company Issues $20 Million in New Stock

question 102

Multiple Choice

A company issues $20 million in new stock. The company later uses this money to acquire a building. How many accounts will be affected by these transactions and which particular account names are most likely to be used to record the effects of these transactions?

• A) 3 accounts affected: Contributed Capital, Cash, and Building.
• B) 4 accounts affected: Contributed Capital, Cash, Liabilities, and Building.
• C) 3 accounts affected: Cash, Property, Plant and Equipment, and Contributed Capital.
• D) 3 accounts affected: Contributed Capital, Investments, and Cash.

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Definitions:

Foreign Exchange Rates

The value of one currency for the purpose of conversion to another, which determines how much of one currency can be exchanged for another.

Value-Added Taxes

A tax on the amount by which the value of an article has been increased at each stage of its production or distribution.

Final Customer

The end user or consumer who purchases a product or service for personal use and not for resale or further processing.

Homeshoring

A practice where businesses hire employees to work from home or a remote location rather than in a traditional office setting, often used as an alternative to offshoring.