White Corporation issued new shares during the year. In which financial statement would this transaction primarily be reflected?

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BlackTom AI · Accepted Answer

Reinstating the question in my own words: when a company issues new shares during the year, which financial statement would primarily reflect that transaction?

Option a: Both Income Statement and Statement of Changes in Equity. The Income Statement records revenues and expenses, not equity transactions like issuing shares. While the Statement of Changes in Equity (or Statement of Shareholders’ Equity) does show changes in contributed capital, the income statement is not the primary place for share issuance.

Option b: Income Statement. This is incorrect because share issuance affects the equity section of the balance sheet and the Statement of Changes in Equity, not the income statement, which tracks operating performance.

Option c: None of the above. Since there is a relevant financial statement for equity changes, this option is false.

Option d: Statement of Changes in Equity. This is the primary place where increases in contributed capital (such as issuing new shares) are recorded, reflecting changes in common stock, additional paid-in capital, and total equity for the period. Although the balance sheet also reflects the new equity, the question asks for the primary statement, which is the SEI.

In summary, share issuances change the equity section and are primarily captured in the Statement of Changes in Equity, not the Income Statement (and not in both statements as a combined result).

ACB1020 - S1 2025 Topic 4 Assessment Quiz (1%)

White Corporation issued new shares during the year. In which financial statement would this transaction primarily be reflected?

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