A Stock Split by a Subsidiary Increases the Number of Shares

question 6

True/False

A stock split by a subsidiary increases the number of shares outstanding,but it does not affect the net assets of the subsidiary or the individual equity accounts.

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Definitions:

Cash Flow Test

A financial analysis method to determine the liquidity of a company by measuring the cash it generates or uses in its operations.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Revised Act

A legislative act that has been amended or updated from its original version to incorporate changes in law or policy.

Illegal Dividend

A payment made by a corporation to its shareholders that is not allowed by law or its own bylaws, typically because it exceeds the company's current or retained earnings.