When a company makes a rights issue of equity shares which of the following effects will the isue have?
1 Assets are increased 2 Retained earnings are reduced 3 Share premium account is reduced 4 Investment are increased
? 1 only ? 1 and 2 ? 3 only ? 1 and 4
The Correct answer is 1st option ( 1 only). But I don’t understand why not the last option (1 and 4). Investment is increased because share equity increased so why not?