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

question 165

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:

Leisure

The time available for purposes other than earning money to buy marketed goods.

Nonmarket Use

Utilization or value derived from a good or service outside of commercial or financial transactions, typically involving public or shared resources.

Labor Supply

The total hours that workers are willing and able to work at a given wage rate, across different jobs and industries.

Substitution Effect

The change in quantity demanded of a good due to a change in its price, leading consumers to switch to or from substitute products.