Choose the Appropriate Letter to Match the Description with the Purpose

question 44

Essay

Choose the appropriate letter to match the description with the purpose and accounting effect of the type of stock transaction.Some letters will appear in more than one column and not all letters will necessarily be used.Some blanks will require more than one letter.
$$\begin{array} { | l | l | c | c | } \hline & \text { Stock Split } & \begin{array} { c } \text { Large Stock } \\\text { Dividend }\end{array} & \begin{array} { c } \text { Stock } \\\text { Repurchase }\end{array} \\\hline \text { Purpose } & & & \\\hline \text { Accounting Effect } & & & \\\hline\end{array}$$
A. To obtain shares to reissue to employees as part of employee stock purchase plans.
B. To increase the number of shares outstanding and decrease the per-share market price while managing a company that you expect will struggle financially in the future.
C. To reduce the number of outstanding shares to increase per-share measures of earnings.
D. To increase the number of shares outstanding and decrease the per-share market price while signaling to financial statement users that the company expects significant future earnings.
E. To obtain shares that can be reissued as payment for purchases of other companies.
F. To send a signal to investors that the company itself believes its own stock is worth acquiring.
G. Reduces stockholders' equity.
H. Changes par value per share.
I. Changes Additional Paid-in Capital account balance.
J. Reduces Retained Earnings.
K. Does not affect any of the account balances that comprise stockholders equity

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