Which of the Following Is Not True About a Stock

question 3

Multiple Choice

Which of the following is not true about a stock dividend?

• A)With a stock dividend,the firm issues a percentage of outstanding stock as new shares to existing shareholders.
• B)The overall effect of a stock dividend is to leave total stockholders' equity and each owner's share of stockholders' equity unchanged.
• C)In theory,with a stock dividend,total market value considering all outstanding shares should not change.
• D)Since the number of shares changes under a stock dividend,any ratio based on the number of shares must be restated.
• E)The accounting for a stock dividend,assuming the distribution is relatively small,requires that the par value of the stock be removed from retained earnings.

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Definitions:

Validity

The extent to which a test, tool, or research study measures what it intends to measure.

Verbal Comprehension

The ability to understand and interpret spoken and written language.

Perceptual Reasoning

The ability to use visual information to solve problems, make decisions, and understand spatial relationships.

WISC-IV

The Wechsler Intelligence Scale for Children, Fourth Edition, a tool used to assess the intelligence level of children.