A 2-For-1 Stock Split Is Declared

question 26

Multiple Choice

A 2-for-1 stock split is declared. In this case, which of the following statements is true?

• A) The cash account declines.
• B) The common stock account rises.
• C) The retained earnings fall.
• D) The par value of the common stock is reduced.

---

Definitions:

Annual Cash Operating Costs

The total amount of money a company spends on its day-to-day operations within a fiscal year.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculated by discounting all future cash flows to their present value and subtracting the initial investment.

Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Annual Cash Operating Inflows

Annual cash operating inflows refer to the total cash receipts a business receives from its operating activities during a fiscal year.