Question

A stock split is a process by which a corporation reduces the par or stated value...

A stock split is a process by which a corporation reduces the par or stated value of its common stock and _____.
a. distributes the stock dividend to stockholders
b. determines which stockholders will receive the dividend
c. decreases the retained earnings of the corporation
d. issues a proportionate number of additional shares
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Answer #1

Correct option is d. Issue a proportionate number of additional shares.

Explanation:

A stock split is a process by which a corporation reduces the par or stated value of its common stock and issues a proportionate number of additional shares.

Company uses a proper method for stock split and it is decided annual general meeting of the company's.

For example: Number of share outstanding is 10000 and company announced stock split 2 share for every one share held so now total number of share become 20000.

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