A stock split is a monetary transaction. Consequently, a company that splits its stock must make several financial statementadjustments.TrueFalse

A stock split is when a company increases the number of its shares and reduces the stock price per…

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

All of the following are rationales given for a stock dividend or split EXCEPT A. there is positive informational content associated with the announcement. B. the price will not fall proportionately to the share increase. C. conservation of corporate cash. D. an optimum price range does not exist.
The declaration of the dividends by a company has no effect on the retained income of the company, true or false?
When a share split occurs, the aggregate par value of issued shares will change. True False
Indicate whether the following statements are true or false. If the statementis false, explain why.a. If a firm repurchases its stock in the open market, the shareholders whotender the stock are subject to capital gains taxes.
The cash flows associated with common stock are more difficult to estimate than those related to bonds because stock has a residual claim against the company versus a contractual obligation for a bond. Group of answer choices True False
Which of the following statements is false? Multiple Choice Both stock splits and stock dividends increase the number of common shares issued. Both stock splits and stock dividends increase the number of common shares outstanding. Stock splits reallocate amounts between retained earnings and contributed capital accounts. Both stock splits and stock dividends have the impact of reducing the market price of the stock.
What is the purpose of a stock dividend or stock split? How does a stock split impact a company's financial statements? How does a stock split impact a stockholders' individual investment?What is a reverse stock split?
When non-par value shares are reacquired at a cost greater than their average issue price and cancelled, what account(s) should be debited? Select one: a. The share account for the total cost. b. The share account for the average issue price, contributed surplus-repurchases up to its account balance, other contributed surplus relating to this class of shares in proportion to the number of shares repurchased versus outstanding and lastly retained earnings for any remaining amount. c. The share account for the average per share amount, retained earnings for the additional amount, and lastly contributed surplus for any remaining amount. d. The share account for the average per share amount and a loss account for the additional amount. e. none of the above answers are correct.
Under IFRS, the unrealized loss on trading investments should be reported: a. as part of other comprehensive loss, reducing net income. b. on the income statement, reducing net income. c. as part of other comprehensive loss, not affecting net income. d. directly to stockholders' equity, bypassing the income statement.
When you are purchasing a company stock, you are purchasing part of the company. True False
1.Which statement is incorrect? * a. On repurchase of treasury shares, no gain or loss is recognized. The purchase price would become the cost of treasury shares. b. On reissuance of treasury shares, the difference between the cost and reissue price of treasury shares is debited or credited to share premium rather than to profit or loss. c. If treasury shares are retired above par, the difference between the cost and the par value is automatically charged to retained earnings. d. Treasury shares can be subjected to share split and can be re-issued as share dividends. e. none of the above 2. Which statement is incorrect? a. Dividends out of retained earnings is limited to the balance of unappropriated retained earnings, except for share dividends. b. Cash dividends are paid on the basis of the number of shares issued less the number of treasury shares. c. Property dividends payable shall be measured based on fair value of the property on the date of declaration, reporting and…
An entity need not disclose... a. A description of the nature and purpose of each reserve within equity. b. Fair value per share, or that the shares have no fair value. c. The rights, preferences and restrictions attaching to that class including restrictions on the distribution of dividends and the repayment of capital. d. A reconciliation of the number of shares outstanding at the beginning and at the end of the period.

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A stock split is a monetary transaction. Consequently, a company that splits its stock must make several financial statement adjustments. True False