Correlation Indicates Cause and Effect

question 51

True/False

Correlation indicates cause and effect.

Appreciate how the market value of stock affects corporate actions such as stock dividends and splits.

Recognize the purposes and effects of stock splits and stock dividends on par value, market value, and shareholders' equity.

Know how treasury stock transactions are recorded and their impact on financial statements.

Understand the reporting of treasury stock in financial statements and its impact on stockholders' equity.

---

Definitions:

Relevant Costs

Costs that should be considered when making business decisions because they will be affected by the decision.

Direct Material Costs

Direct material costs are the expenses for raw materials that can be directly traced to the production of specific goods or services.

Variable Manufacturing Overhead

Costs of manufacturing that vary directly with the level of production, aside from direct labor and materials.