Nontaxable Stock Dividends Result in No Change to the Total

question 73

True/False

Nontaxable stock dividends result in no change to the total basis of the old and new stock, but the basis per share decreases.

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Definitions:

Percentage-of-Sales Basis

A method used in budgeting and planning where certain costs or expenses are based on a fixed percentage of sales.

Accounts Receivable

Money owed to a business by its clients for goods or services that have been delivered but not yet paid for.

Allowance for Doubtful Accounts

A contra-asset account representing the estimated amount of receivables that may not be collected, reducing net accounts receivable to a more realistic value.

Aging Schedule

An aging schedule is an accounting table that shows the breakdown of accounts receivables according to the length of time an invoice has been outstanding.