A Large Stock Dividend and a Stock Split Are Similar

question 25

Multiple Choice

A large stock dividend and a stock split are similar in that they both cause a:

• A)Reduction in total stockholders' equity.
• B)Reduction in retained earnings.
• C)Reduction in the par value per share.
• D)Reduction in the market price per share.

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Definitions:

Prepaid Expenses

Costs incurred upfront for the future receipt of goods or services.

Adjusting Entry

An accounting entry made at the end of an accounting period to allocate income and expenditure to the appropriate period.

Expenses

Costs incurred by a business in the process of earning revenue, including operational costs, wages, and utilities, reflected on the income statement.

Straight-Line Depreciation

A system for allocating the expenditure of a material asset across its life expectancy in identical yearly figures.