What typically occurs to a company's assets after issuing common stock?

When a company issues common stock, it typically receives cash or other assets in exchange for those shares. This transaction leads to an increase in the company's assets.

When common stock is sold, the company raises capital which can be used for various purposes such as investing in new projects, purchasing assets, or paying down debt. The increase in assets reflects the inflow of cash or other resources that the company receives as consideration for the equity it offers to shareholders. This influx is recorded as an increase in assets on the balance sheet.

It's important to note that while the issuance of common stock increases assets, it also increases shareholders' equity, as the common stock represents ownership in the company. However, unlike liabilities, the equity does not entail a repayment obligation, creating a favorable situation for the company as it grows.

The other answers do not accurately represent what occurs when common stock is issued. For example, stating that assets may remain unchanged overlooks the fundamental effect of capital raising on a company's balance sheet. An assertion that assets decrease would be incorrect, as issuing stock does not result in a reduction of assets. Finally, the idea that assets are shifted to liabilities misrepresents the nature of stock issuance, which primarily affects the equity section rather than altering the liabilities.