Which of the Following Statements Is TRUE

question 115

Multiple Choice

Which of the following statements is TRUE?

• A) Both a stock dividend and a stock split increase the balance in the common stock account.
• B) Both a stock dividend and a stock split reduce retained earnings.
• C) Neither a stock dividend nor a stock split will result in net gains or losses.
• D) A stock split increases the par value of the stock.

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Definitions:

Compounded Semiannually

A method of computing interest where the interest is added to the principal twice a year, leading to interest being earned on interest from the next period.

Semiannual Compounding

Refers to the process of applying interest to a principal amount twice a year, resulting in interest being calculated on previously earned interest as well as the principal.

Calgary Real Estate Board

An industry association in Calgary, Alberta, that provides resources and support to real estate professionals.

Compound Increase

An increase where interest is calculated on the initial principal and also on the accumulated interest of previous periods.