A Company Received Cash in Exchange for Issuing Stock

question 162

Multiple Choice

A company received cash in exchange for issuing stock. This transaction increased assets and:

• A) increased expenses.
• B) increased revenues.
• C) increased liabilities.
• D) increased equity.

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Definitions:

Operating Leverage

A measure of how sensitive a company's operating income is to a change in its sales volume, indicating the degree to which fixed costs are used in production.

Profits

The financial gain obtained when revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain them.

Demand-Side Economics

An economic theory focused on increasing demand for goods and services as a pathway to economic growth and full employment.

Fiscal Policy

The use of government spending and taxation to stabilize the economy.