Testbank Multiple Choice Question 61
A feature common to both stock splits and stock dividends
is
an increase in total liabilities of a corporation. |
a transfer to earned capital of a corporation. |
that there is no effect on total stockholders' equity. |
a reduction in the contributed capital of a corporation. |
Testbank Multiple Choice Question 62
What effect does the issuance of a 2-for-1 stock split have on
each of the following?
Par Value per Share |
Retained Earnings |
|
|
|
|
61. Answer: That there is no effect on total stockholders' equity
Explanation:
No increase in total liabilities of a corporation in both stock splits and stock dividends
Transfer to earned capital of a corporation happens in Stock dividends but not in Stock split
An increase in the contributed capital of a corporation in stock dividends. No increase or decrease in stock splits
However,
In both there is no change in total stockholders' Equity because
Thus, Option iii is correct.
62. Answer:
Decrease | No effect |
Explanation:
Par value per share | Retained earnings |
Decrease | No effect |
Thus, Option ii is correct and remaining options are incorrect.
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