What Effect Does a Stock Substitution or Stock Split Have

question 46

Multiple Choice

What effect does a stock substitution or stock split have on a price-weighted series?

• A) Index remains the same; divisor will increase/decrease.
• B) Divisor remains the same; index will increase/decrease.
• C) Index and divisor will both remain the same.
• D) Index and divisor will both reflect the changes (immediately).
• E) None of these are correct.

Comprehend the role of merchandise inventory in accounting and its normal balance.

Know the terms related to shipping and their impact on freight costs and title passage.

Recognize the documentation used in the purchasing process and their purposes.

Understand the effects of buying and returning merchandise on financial statements.

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