Which of the Following Statements About a 2:1 Share Split

question 23

Multiple Choice

Which of the following statements about a 2:1 share split is NOT true?

• A) The number of shares is doubled.
• B) The unit market price of each share is reduced.
• C) The value of share capital is doubled.
• D) No journal entry is required.

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Definitions:

Variable Cost

Charges that directly correlate with the amount of goods produced or the level of output.

Fixed Costs

Expenses that do not change with an increase or decrease in the number of goods or services produced, such as rent, salaries, and insurance.

Break-Even Point

The point at which total revenue equals total costs, resulting in neither profit nor loss.

Variable Costs

Costs that change in proportion with the level of activity or production volume of a company.