Asked by Laura Derhamer on May 21, 2024
Verified
The issuance of common stock affects both paid-in capital and retained earnings.
Paid-In Capital
Capital contributed to a corporation by the stockholders and others.
Common Stock
A form of corporate equity ownership, a type of security representing ownership in a corporation and a claim on part of the company’s profits.
Retained Earnings
Accumulated net income of a company that has not been distributed to shareholders as dividends.
- Understand how the issuance of common stock impacts financial statements, particularly paid-in capital and retained earnings.
Verified Answer
UM
Usama ManzoorMay 25, 2024
Final Answer :
False
Explanation :
Issuing common stock increases paid-in capital but does not affect retained earnings, as it involves obtaining new equity from shareholders, not distributing profits.
Learning Objectives
- Understand how the issuance of common stock impacts financial statements, particularly paid-in capital and retained earnings.