Which of the following statements is correct?
A)Stock splits and stock dividends both reduce the market price of a share,but only stock splits reduce the par value of a share.
B)Stock splits and stock dividends both reduce the market price of a share and the par value of a share.
C)Stock splits and stock dividends both reduce the market price of a share,but only stock dividends reduce the par value of a share.
D)Stock splits and stock dividends both reduce the market price of a share and reduce Retained Earnings.

Question

Quizplus · Accepted Answer

Both stock dividends and stock splits increase the number of shares outstanding and decrease the per-share market price.Stock dividends are recorded by transferring an amount from Retained Earnings to contributed capital accounts.Typically,a stock split involves revising the corporate charter to reduce the per-share par value of all authorized shares,so that the total par value across all shares is unchanged.

Which of the Following Statements Is Correct