A Two for One Stock Split Causes the Divisor in a Price-Weighted

question 55

True/False

A two for one stock split causes the divisor in a price-weighted series to decline.

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Definitions:

Cash Basis

A bookkeeping approach that only recognizes earnings and outgoings at the time cash is exchanged.

Financing Activities

Activities that result in changes in the size and composition of the equity capital or borrowings of a company.

Direct Method

A cash flow statement preparation approach where actual cash flow information from the company's operations is used, as opposed to indirect methods which adjust net income.

Sales Adjusted

The revised value of sales after accounting for returns, allowances, and discounts.