Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Stock Dividends

Financial Accounting

12. Stockholders' Equity

Stock Dividends

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Multiple Choice

Which of the following is true about a stock split?

A stock split increases the par value per share.

A stock split increases the number of shares outstanding without changing the total equity of the company.

A stock split decreases the total equity of the company.

A stock split results in a cash outflow to shareholders.

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Verified step by step guidance

Understand the concept of a stock split: A stock split is a corporate action where a company divides its existing shares into multiple shares to boost liquidity. It does not affect the total equity of the company or result in a cash outflow.

Analyze the impact on par value per share: In a stock split, the par value per share decreases proportionally to the split ratio, not increases. For example, in a 2-for-1 split, the par value per share is halved.

Examine the number of shares outstanding: A stock split increases the number of shares outstanding proportionally to the split ratio. For instance, in a 2-for-1 split, the number of shares doubles.

Evaluate the effect on total equity: The total equity of the company remains unchanged because the split does not involve issuing new equity or altering the company's financial position.

Clarify the cash flow aspect: A stock split does not result in a cash outflow to shareholders, as it is purely a reallocation of shares and does not involve any monetary transaction.