When a Company Issues Common Stock for Cash,what Is the Effect

question 33

Multiple Choice

When a company issues common stock for cash,what is the effect on the accounting equation for the company?

• A)Assets increase and liabilities increase.
• B)Assets increase and stockholders' equity increases.
• C)Assets decrease and liabilities decrease.
• D)Liabilities decrease and stockholders' equity increases.

Evaluate investment decisions under different capital cost conditions.

Understand the impact of GDP growth on living standards over time.

Calculate break-even quantities and understand their significance.

Determine the contribution margin and its impact on pricing and profit strategy.

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Definitions:

Covenants

Clauses in a contract or loan agreement that stipulate certain actions that must be taken or avoided by the borrower.

Dividend Payments

Periodic payments made by a company to its shareholders out of its profits or reserves.

Dividend Payout Ratio

A financial metric that shows the percentage of earnings a company distributes to shareholders in the form of dividends.

Yearly Dividend

The total dividend payment a company distributes to its shareholders annually, often expressed as a per share amount.