Question

Heidi Aurora Imports issued shares of the company's Class B stock. Heidi Aurora Imports should report the stock in the company's statement of financial position

A) As a liability
B) As part of shareholders' equity
C) As an expense
D) As a contra asset

Answer 1

Heidi Aurora Imports should report the issued shares of Class B stock in the shareholders' equity section of the statement of financial position because it represents ownership interests.

Step-by-step explanation:

When Heidi Aurora Imports issued shares of the company's Class B stock, the appropriate way to report this event in the company's statement of financial position is as part of shareholders' equity. This is because issuing stock represents ownership interests in the company and results in the company receiving capital from investors. Therefore, the stock should be classified as equity rather than as a liability, expense, or contra asset.