1. Statement 1: A split up increases the number of shares held and decreases the cost per share. Statement 2: A stock dividend is recorded as a credit to dividend income. a. Only statement 1 is true b. Only statement 2 is true c. Both statements are true d. Both statements are false
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1. Statement 1: A split up increases the number of shares held and decreases the cost per share. Statement 2: A stock dividend is recorded as a credit to dividend income.
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- A 2-for-1 stock split is declared. In this case, which of the following statements is true? A. The retained earnings fall. B. The common stock account rises. C. The cash account declines. D. The par value of the common stock is reduced.Answer the following as True or False, and then select the correct multiple choice answer: _________Declaring and paying a stock dividend decreases both Retained Earnings and Stockholders' Equity in total on the balance sheet ________Stock splits have no impact on Stockholders' Equity, but do change the par value of the stock. _______ Treasury Stock is considered a contra-equity account and therefore decreases the company's total Stockholders' Equity balance.Flexsteel is giving out a large stock dividend. This would: A. Results in a transfer of retained earnings to the common stock account B. Reduces the par value per share by the percentage of the additional shares issued. C. Is accounted for in exactly the same manner as a stock split D. Results in a transfer of retained earnings to common stock and additional paid in capital
- How does a 2: 1 stock split (stock-split-up) affect the following two items? Par Value per Share Retained Earnings Select one: to. Increase Has no effect b. Decrease Decrease c. Decrease Has no effect d. Has no effect Has no effectWhich of the following statement is false in regards to Share premium? a. It will be shown under equity section in the balance sheet b. It will be credited at the time of issue of new shares along with premium c. It cannot be distributed as dividend to the shareholders d. It can be distributed as dividend to the shareholdersWhich statement is false? - stock dividend increases the amount of paid in capital -Stock splits cause no change in the amount of the stockholder's equity - stock splits increase the number of shares -stock dividend increases total stockholders equity
- What is the effect of purchasing treasury stock on a company’s earnings per share and return on equity, respectively? (Enter 1, 2, 3, or 4 that represents the correct answer.) No effect and no effect Decrease and decrease Increase and increase Increase and decreaseWhich of the following statements is false? a. the common stock account has a credit balance. b. the additional paid-in capital account has a credit balance. c. common stock may be issued for more than par value. d. the par value of common stock represents the stock's market value.6. In computing Earnings per share when there are preference shares, the total net income after tax is reduced by the dividend in arrears of cumulative preference shares. TRUE FALSE 7. Basic earnings per share will serve as a guide to investors as to the attractiveness of ordinary shares as an investment. TRUE FALSE 8. Book value per share is computed by dividing the net assets to the total number of shares outstanding. TRUE FALSE
- The primary purpose of a stock split is to a. reduce the market price of the stock per share. b. increase paid-in capital. c. increase retained earnings. d. increase the market price of the stock per share.Which of the following is the reason that preferred dividends declared during the period are deducted from net income in calculating return on common stockholders’ equity? a. Preferred dividends are not paid from net income. b. Preferred dividends are not a part of stockholders’ equity. c. Preferred dividends are not paid until all common stockholders have received their dividends, so preferred dividends are not relevant in the formula and so must be taken out of the equation. d. Preferred dividends will reduce the amount of income available for distribution to common stockholders.If a preferred stock is of the cumulative type, a. dividends cannot be passed if they are earned. b. unpaid dividends of one period must be carried forward and paid in subsequent periods before anything can be paid to common stockholders. c. dividends must be paid, and if not a liability is created. d.dividends must be paid on an equal basis with common stock, so long as earnings permit.