Which of the Following Actions Will Increase the Balance in the Common

question 103

Multiple Choice

Which of the following actions will increase the balance in the Common Stock account?

• A)cash dividend
• B)stock split
• C)stock dividend declared and distributed
• D)purchase of treasury stock

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Definitions:

Perpetuity Rate of Return

The rate at which an infinite series of cash flows, received indefinitely, is discounted to equate its present value.

Stated Dividend

The amount of dividend that a company declares to be paid out to its shareholders, usually expressed as a fixed amount per share.

Cost of Capital

The yield a corporation needs to generate on its investments in order to preserve its market value and draw in financing.

Internal Rate of Return

The internal rate of return (IRR) is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero, used to evaluate the profitability of potential investments.