Which of the following statements is TRUE?
A) Both a stock dividend and a stock split increase the balance in the common stock account.
B) Both a stock dividend and a stock split reduce retained earnings.
C) Neither a stock dividend nor a stock split will result in net gains or losses.
D) A stock split increases the par value per share of the stock.

Question

Quizplus · Accepted Answer

C) Neither a stock dividend nor a stock split will result in net gains or losses. This is because both actions are essentially redistributions of shares that do not affect the overall value of the company in the market. A stock dividend distributes additional shares to shareholders, and a stock split increases the number of shares while reducing the price per share, but neither creates an immediate financial gain or loss for the company or its shareholders.

Which of the Following Statements Is TRUE