Which of the Following Show the Proper Effect of a Stock

question 28

Short Answer

Which of the following show the proper effect of a stock split and a stock dividend? $\begin{array}{ccc}&&&&\text { Item}&&&&&\text { Stock Split } && \text { Stock Dividend } \\\end{array}$
A) $\begin{array}{ccc}\text { Total paid-in capital } &&& \text { Increase } &&& \text { Increase } \\\end{array}$
B) $\begin{array}{ccc}\text { Total retained earnings } && \text { Decrease } &&& \text { Decrease } \\\end{array}$
C) $\begin{array}{ccc}\text { Total par value (common) } & \text { Decrease } &&& \text { Increase } \\\end{array}$
D) $\begin{array}{ccc}\text { Par value per share } &&&& \text { Decrease } &&& \text { No change }\end{array}$

• A)\(\begin{array}{ccc}
• \text { Total paid-in capital } &&& \text { Increase } &&& \text { Increase } \\\end{array}\)
• B)\(\begin{array}{ccc}\text { Total retained earnings } && \text { Decrease } &&& \text { Decrease } \\\end{array}\)
• C)\(\begin{array}{ccc}\text { Total par value (common) } & \text { Decrease } &&& \text { Increase } \\\end{array}\)
• D)\(\begin{array}{ccc}\text { Par value per share } &&&& \text { Decrease } &&& \text { No change }
• \end{array}\)

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Definitions:

Market Equilibrium

A state where supply equals demand, resulting in stable prices and quantities in the marketplace.

Wealth-Creating Transactions

Transactions that increase the wealth of the participating parties, usually through the production, exchange, or transfer of goods and services.

Wealth-Destroying Transactions

Transactions that result in a decrease in the overall wealth of the participants, often due to negative externalities or inefficient allocation of resources.

Peanuts

Legumes that are commonly consumed as snacks or used in the culinary world, also known for their oil.