Which of the Following Transactions Will Increase Stockholders' Equity

question 54

Multiple Choice

Which of the following transactions will increase Stockholders' Equity?

• A) The company pays a dividend to its shareholders.
• B) The company issues common stock to new shareholders.
• C) The president of the company buys a new personal automobile.
• D) The company makes a payment on account.

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Definitions:

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total tax paid by the taxable income.

401k Plan

A retirement savings plan sponsored by an employer allowing employees to save and invest a portion of their paycheck before taxes are taken out.

Take Home

The net amount of income that an individual actually receives after all deductions, such as taxes and social security contributions.

Taxable Bond Portfolio

A collection of bonds whose interest payments are subject to federal and possibly state income taxes.