US Trends

which of the following shows how acquiring cash from the issue of common stock will affect a company’s financial statements?

Issuing common stock for cash increases total assets and total equity by the same amount, and it appears as a financing cash inflow on the statement of cash flows, with no effect on the income statement.

In the typical “which of the following” format, the correct row would look like this:

  • Balance sheet:
    • Assets: increase (Cash ↑)
    • Liabilities: no change
    • Equity: increase (Common stock and possibly Additional paid‑in capital ↑)
  • Income statement:
    • Revenue: no change
    • Expenses: no change
    • Net income: no change
  • Statement of cash flows:
    • Cash flows from financing activities: increase (cash received from issuing stock)

So, in the usual multiple‑choice shorthand, the “correct” line is the one that shows:

  • Assets ↑ = Liabilities (no change) + Equity ↑
  • No effect on revenue, expenses, or net income
  • Cash flows ↑ from financing activities, not operating or investing.