How Is Cash Invested by Shareholders in Exchange for Shares

question 43

Multiple Choice

How is cash invested by shareholders in exchange for shares initially recorded in the accounting records?

• A) as an increase in retained earnings, and an increase in cash
• B) as an increase in long-term investments, and a decrease in cash
• C) as an increase in common shares, and a decrease in cash
• D) as an increase in common shares, and an increase in cash

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Definitions:

Consumer Equilibrium

The point at which an individual's income is perfectly balanced with their consumption preferences, maximizing utility.

Total Utility

The total satisfaction received from consuming a given total quantity of a good or service.

Income

The money received by an individual or business in exchange for labor, services, or investment, constituting a basis for consumption and savings.

Consumer Equilibrium

The point at which the amount of goods purchased by a consumer is equal to their preference at prevailing market prices, maximizing utility.