If a Corporation Declares a 2-For-1 Stock Split, Which of the Following

question 227

Multiple Choice

If a corporation declares a 2-for-1 stock split, which of the following is true?

• A)A journal entry is required to show the effect on the stockholders' equity accounts.
• B)The stockholders will have a higher proportionate ownership share after the split.
• C)The par value will be reduced to half of the pre-split par value.
• D)The market price of the stock is expected to increase after the split.

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Definitions:

Net Investment

The total amount spent by a company or economy on capital assets, minus depreciation.

Autonomous Consumption

Consumption expenditure that occurs when income levels are zero, reflecting basic survival expenses.

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The cost per barrel of crude oil on the global market, influenced by supply and demand, geopolitical events, and other factors.

Adverse Supply Shock

An unexpected event that suddenly decreases the supply of a commodity or service, leading to increased prices and reduced output.