The Reduction of Par or Stated Value of Stock by Issuance

question 104

Multiple Choice

The reduction of par or stated value of stock by issuance of a proportionate number of additional shares is termed a:

• A) stock dividend.
• B) stock split.
• C) stock option.
• D) preferred dividend.

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Definitions:

Capital Accounts

Accounts that reflect the equity or ownership interest of shareholders or partners in a company or partnership, including contributed capital and retained earnings.

Liquidation Expenses

Costs associated with closing down a business, including selling assets, paying off creditors, and distributing any remaining assets to shareholders.

Cash Balance

The amount of cash a company holds in its accounts at a given time.

Safe Distribution

The allocation of resources or assets in a manner that minimizes risk and ensures the security of such distribution.