Changes from issuing new shares

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Multiple Choice

Changes from issuing new shares

Explanation:
Issuing new shares changes financing, not operating results. It doesn’t affect revenues or expenses, so the income statement shows no change. The cash flow statement records this as a financing activity, reflecting the cash inflow from issuing stock. On the balance sheet, the proceeds boost assets (cash) and also increase shareholders’ equity (through common stock and contributed capital). So the best answer is the one that has no change on the income statement, classifies the event under financing activities, and shows increases in cash and equity on the balance sheet.

Issuing new shares changes financing, not operating results. It doesn’t affect revenues or expenses, so the income statement shows no change. The cash flow statement records this as a financing activity, reflecting the cash inflow from issuing stock. On the balance sheet, the proceeds boost assets (cash) and also increase shareholders’ equity (through common stock and contributed capital). So the best answer is the one that has no change on the income statement, classifies the event under financing activities, and shows increases in cash and equity on the balance sheet.

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