Which of the Following Statements Is True

question 181

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:

Profit Margin

A financial metric that measures the amount of profit made on a sale as a percentage of revenue, illustrating efficiency.

Retention Ratio

The retention ratio is a financial metric that measures the proportion of a company's earnings that are not distributed as dividends to shareholders but are instead reinvested in the business.

Debt-equity Ratio

A measure of a company's financial leverage calculated by dividing its total liabilities by its shareholder's equity.

Growth Rate

Growth rate refers to the percentage increase in the size or value of something over a specific period.