The Purchase of an Asset for Cash

question 62

Multiple Choice

The purchase of an asset for cash

• A) increases assets and shareholders' equity.
• B) increases assets and liabilities.
• C) decreases assets and increases liabilities.
• D) has no effect on total assets.

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Definitions:

Corporate Powers

The legal rights and authorities that a corporation possesses, including entering contracts, owning property, and conducting business activities.

Transfer Restriction

Legal limitations or conditions placed on the transferability of an asset or security.

Share Certificate

A physical document certifying ownership of a particular number of shares in a company.

MBCA

Model Business Corporation Act, a template for state legislation that provides a statutory framework for the creation and operation of corporations within the United States.