Accounting Equation:Owners Equity + Liabilities=Fixed Assets + Current AssetsWhen the Owner is bringing capital by issuing shares, it increases owners' equity along with the cash or bank balance. Hence both assets and owner's equity increases. 1. Bonus Issue:A bonus issue, also known as a scrip issue or a capitalization issue, is an offer of free additional shares to existing shareholders. A company may decide to distribute further shares as an alternative to increasing the dividend payout. For example, a company may give one bonus share for every five shares held. Issuing bonus shares does not involve cash flow. It increases the companys share capital but not its net assets. 2. Dividend Declared:Companies often payout a portion of their profits as dividends to the shareholders. Dividend payouts are a way to provide shareholders with a return on their investment. When the board of directors makes such a decision and declares a dividend for payment to stockholders, the retained earnings account on the company's balance sheet is reduced by the amount of the declared dividend. The retained earnings are an account of equity that shows the net balance of a company's earnings. Since the retained earnings account is an equity account, dividend payments must be deducted from the account, reflecting the reduction in total shareholder equity. Therefore, shares issued for cash will result in an increase of assets and an increase in owners equity.