A Stock Split

question 23

Multiple Choice

A stock split:

• A) results in the dilution of the existing shareholders' interest.
• B) results in a change in the par and stated value of the stock.
• C) leads to a change in the assets of the company.
• D) leads to a change in the surplus of the company.
• E) seldom requires the approval of existing shareholders.

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Definitions:

Consolidated Financial Statements

Financial statements that aggregate the financial information of a parent company and its subsidiaries as if they were a single entity.

Parent

A term used to refer to a company that owns more than half of another company, making the latter a subsidiary.

Subsidiary Companies

These are companies that are controlled by another company, known as the parent company, through ownership of more than half of their voting stock.

Stock Investments Account

An account that records the cost of stocks that have been purchased as investments by a company.