A Stock Split Results in a Transfer at Market Value

question 38

True/False

A stock split results in a transfer at market value from retained earnings to paid-in capital.

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Definitions:

Market Price

The current price at which an asset or service can be bought or sold in a competitive and open market.

Shares Outstanding

Represents the total number of a company's shares that are currently owned by shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Stock Dividend

A dividend payment made to shareholders in the form of additional shares, rather than cash.

Net Income

The total earnings of a company after subtracting all expenses from revenue, including taxes and operating expenses.