Which of the Following Statements Is TRUE

question 160

Multiple Choice

Which of the following statements is TRUE?

• A) Both a stock dividend and a stock split increase the balance in the common stock account.
• B) Both a stock dividend and a stock split reduce retained earnings.
• C) Neither a stock dividend nor a stock split will result in net gains or losses.
• D) A stock split increases the par value per share of the stock.

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Definitions:

Net Income

Represents the total profit of a company after all expenses and taxes have been subtracted from total revenue.

Insurance Policy

A contract between an insurer and a policyholder stipulating the terms under which the insurer agrees to compensate the insured for specific losses.

Adjusting Entry

An accounting entry made into a journal at the end of an accounting period to allocate income and expenditure to the period in which they actually occurred.

Property Tax

A tax assessed on real estate by the local government and based on the property's value.