If a Corporation Declares a 2-For-1 Stock Split, Which of the Following

question 227

Multiple Choice

If a corporation declares a 2-for-1 stock split, which of the following is true?

• A)A journal entry is required to show the effect on the stockholders' equity accounts.
• B)The stockholders will have a higher proportionate ownership share after the split.
• C)The par value will be reduced to half of the pre-split par value.
• D)The market price of the stock is expected to increase after the split.

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Definitions:

Current Assets

Resources anticipated to be liquidated, disposed of, or used up within a year or throughout the usual business cycle.

Long-term Investments

Assets that a company intends to hold for more than one fiscal year, including stocks, bonds, real estate, and other financial instruments.

Intangible Assets

Non-physical assets that have value, such as intellectual property, brand recognition, and patents.

Prepaid Expenses

Payments for goods or services that will be received in the future, which are recorded as assets until they are actually used or consumed.