Question

Z best, inc. issued $1,000,000 of common stock for cash. by accident, z best recorded the transaction by increasing cash and decreasing stockholders' equity. as a result of this entry, ______.

Answer 1

As a result of Z best recording the transaction by increasing cash and decreasing stockholders' equity, the result would be The accounting equation is out of balance, SE is understated, contributed capital is understated,

What happens when stock is incorrectly recorded?

When Z Best issued common stock, they should have increased cash and increased stockholders equity.

Because they did not do that, they made the stockholders equity understated and the contributed capital as well. As a result of this, the accounting equation will not balance:

Assets = Equity + Liabilities

The accounting equation will not balance because assets will be more than the sum of equity and liabilities.

Find out more on the accounting equation at brainly.com/question/14236545

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