Discussion on changes in Stockholders' equity
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Please write (3-5 sentences) on why that the statements below is true:
1.If I invest $100 of cash and nothing more. I increase both owners' equity and assets (cash) by $100. This is one debit (asset) and one credit (owners' equity.)
2.dividends decrease stockholders' equity by increasing with a debit.
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Solution Summary
The answer contains the analytical review of the effect of changes in stockholers' equity when there is capital is increased and the dividend is paid. .
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About first statement:
The first statement is true because, when money is invested in the firm, the firm is receiving the money and cash (being the asset) will increase the cash account and subsequently increases the asset side of the Balance sheet. Likewise, since the business has received money from its owner( this is ...
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