Thursday, July 14, 2011
How to account for sale of a stock.?
I do realise if you were to account for a sale of a stock, you would debit cash and credit common stock; however, this only explains the question from a corporate perspective. My question is that if I were to sell my stocks that I own, how would I account for that? I'm somewhat perplexed at this question.I do know common stock in on the owners equity section of the balance sheet and cash is on the assets section of the balance sheet; but I wouldn't be able to debit owners equity as decreases in owners equity are debits, as it violates the elementary rules of financial accounting. Not that I need to know this for a test, I've just been thinking about it all day.
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