Which of the Following Is True with Regards to a Stock

question 47

Multiple Choice

Which of the following is true with regards to a stock dividend?

• A) It results in a transfer of retained earnings to contributed capital.
• B) It increases the number of shares outstanding and involves a pro rata reduction in the par value per share.
• C) It is accounted for in the same manner as a stock split.
• D) It does not require a journal entry.

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Definitions:

Equilibrium Price

The price at which the quantity of goods supplied is equal to the quantity of goods demanded.

Quota Price

The cost associated with acquiring a quota, which is a government-imposed limit on the quantity of a good that can be imported or exported.

Quota Rent

Revenue earned by the holder of a production or import quota, representing the market price minus the supply price under the quota limit.

Missed Opportunity

The failure to seize potential benefits due to lack of action or decision in a timely manner.