Which of the Following Is Not a Side Effect of a Stock

question 28

Multiple Choice

Which of the following is not a side effect of a stock split?

• A) There is no effect on retained earnings account
• B) Investors face no tax implications
• C) The average share price will be reduced to reflect the split
• D) There will be no change in the number of shares outstanding

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Definitions:

Premium on Bonds Payable

The amount by which a bond's selling price exceeds its face value.

Interest Expense

The cost incurred by an entity for borrowed funds over a period, which can include payments on debts, loans, or credit lines.

Interest Payable

The amount of interest on borrowed funds that a company owes to its creditors but has not yet paid.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including materials and labor.