Prady, Inc

question 64

Multiple Choice

Prady, Inc. began operations on October 1, 2011, with 3,000 shares of $2 par common stock authorized. Prady issued all of its common stock during 2011 and 2012. On December 31, 2012, Prady repurchased 1,000 shares of its outstanding shares, then reissued 500 of these shares on March 1, 2013. On June 1, 2013, Prady declared a 2-for-1 stock split. As a result of this stock split, which of the following is true?

• A) Assets decreased.
• B) Stockholders' equity decreased.
• C) Stockholders' equity increased.
• D) Total stockholders' equity remained the same.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities and resources used in the production or delivery process.

Activity Rate

In cost accounting, it's the cost driver rate used in activity-based costing to assign indirect costs to products or services based on each activity's frequency and intensity.

Manufacturing Overhead

All manufacturing costs that cannot be directly traced to individual units produced, such as electricity, maintenance, and factory management salaries.

Activity-Based Costing

A method of accounting that assigns costs to products or services based on the activities required to produce them, aimed at providing more accurate costs.