A Transaction of Issuance of Stock in Exchange for Equipment

question 116

Multiple Choice

A transaction of issuance of stock in exchange for equipment would be recorded as a(n) :

• A)operating activity.
• B)investing activity.
• C)financing activity.
• D)noncash investing and financing activity.

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Definitions:

Externality

A consequence of an economic activity experienced by unrelated third parties; it can be either positive or negative.

External Costs

External costs, or negative externalities, are costs that are not borne by the parties directly involved in a transaction or activity but are imposed on third parties or society at large, such as pollution.

Internalized

This term generally refers to the absorption of external effects or costs by the decision-maker, often in the context of environmental economics.

Coase Theorem

An economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.