Which of the following is a TRUE statement regarding the effect of a stock split and stock dividend on total assets or liabilities?
A) Both a stock split and a stock dividend will decrease total assets.
B) Both a stock split and a stock dividend will increase total liabilities.
C) A stock split will increase total assets, but a stock dividend will not.
D) Neither a stock split nor a stock dividend will affect total assets or total liabilities.

Question

Quizplus · Accepted Answer

Neither a stock split nor a stock dividend will affect total assets or total liabilities. This is because both a stock split and a stock dividend only affect the number of shares outstanding and the par value per share, but do not change the underlying assets or liabilities of the company.

Which of the Following Is a TRUE Statement Regarding the Effect