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

What is the expected impact of a 2-for-1 stock split on a company's shares?

There is no change in the number of shares outstanding or the market price per share.

The total market value of the company doubles.

The number of shares outstanding is halved, and the market price per share doubles.

The number of shares outstanding doubles, and the market price per share is halved.

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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 increases the number of its outstanding shares by issuing more shares to current shareholders. This does not change the total market value of the company.

Analyze the mechanics of a 2-for-1 stock split: In a 2-for-1 stock split, each shareholder receives two shares for every one share they currently own. This doubles the number of shares outstanding.

Consider the impact on the market price per share: Since the total market value of the company remains unchanged, the market price per share is halved to reflect the increased number of shares.

Verify the total market value: The total market value of the company is calculated as the number of shares outstanding multiplied by the market price per share. After the split, the increased number of shares and the halved price per share result in the same total market value.

Conclude the expected impact: The number of shares outstanding doubles, and the market price per share is halved, while the total market value of the company remains unchanged.