Supervox Corporation Declared a 3-For-2 Common Stock Split,but This Transaction

question 85

Multiple Choice

Supervox Corporation declared a 3-for-2 common stock split,but this transaction was erroneously recorded as a 50% common stock dividend.As a result:

• A)Retained earnings is understated.
• B)The total dollar amount of stockholders' equity is overstated.
• C)The corporate records do not show the correct number of shares of common stock outstanding.
• D)The common stock account is understated.

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Definitions:

Normative Economics

An approach to economics that analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action. Also called policy economics.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.

Unemployment

The state of being without a job despite actively looking for work, measured as a percentage of the labor force.

Normative Economics

Normative economics deals with the evaluation of economic outcomes through the prism of what ought to be, recommending actions by what is deemed desirable or ideal.