A Firm Decides to Issue Stock, Pursuant to a Stock

question 51

Multiple Choice

A firm decides to issue stock, pursuant to a stock split, on a 2-for-1 basis.What entry is necessary for this issuance?

• A)Retained Earnings Common Stock--Par Value
• B)Additional Paid-in Capital Common Stock--Par Value
• C)Retained Earnings Common Stock--Par Value
• Common Stock--Additional Paid-in Capital
• D)Common Stock--Par Value Common Stock--Additional Paid-in Capital
• Retained Earnings
• E)No journal entry is necessary but the par value of the stock must be restated on a per share basis.

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Definitions:

Petty Cash Fund

A small pool of funds held for the purpose of settling small, miscellaneous bills immediately.

Miscellaneous Expense

Minor and irregular costs that do not naturally fit into other designated categories of expenses in financial accounting.

Incidentals

Minor or secondary expenses or costs that may occur in addition to the primary expenses.

Cash Burn

The rate at which a company spends its capital to finance overhead before generating positive cash flow from operations.