Immediately After the Stock Split, an Investor Who Owned 100

question 115

Multiple Choice

Immediately after the stock split, an investor who owned 100 share before the split will own

• A) 100 shares worth a total of $4200.
• B) 200 shares worth a total of $8400.
• C) 200 shares worth a total of $16,800.
• D) 200 shares with a par value of $8.00 each.

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Definitions:

Direct Write-off Method

An accounting practice where uncollectible accounts receivable are directly written off against income at the time they are deemed uncollectible.

Uncollectible Receivables

Debts owed to a company that are considered impossible or highly unlikely to be paid, often written off as bad debt.

Bad Debt Expense

An estimated expense that represents the amount of receivables that a company does not expect to collect due to customers' inability to pay.

Allowance for Doubtful Accounts

An estimation of the amount of accounts receivable that may not be collectible, serving as a contra asset account.