A Stock Split

question 40

Multiple Choice

A stock split:

• A) is treated by accountants just like a stock dividend.
• B) reduces the retained earnings account.
• C) does not change the amount in the common stock account.
• D) increases shareholder wealth.

Comprehend the use of the degree of operating leverage and how it affects net operating income in response to sales changes.

Evaluate the effect of changes in marketing strategies, including advertising budget adjustments and sales commissions, on net operating income.

Determine the margin of safety in both dollar terms and units.

Appreciate the impact of incorporating new components or features on product costs and monthly sales.