Which of the following statements is false? Multiple Choice Both stock splits and stock dividends increase...

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 have the impact of reducing the market price of the stock.
Stock splits reallocate amounts between retained earnings and contributed capital accounts.
Both stock splits and stock dividends increase the number of common shares outstanding.

Expert Solution

Option C: Re-allocation between retained earnings & contributed capital accounts.

Explanation:

Stock split refers to the situation where the company issues more shares to the existing shareholders (by breaking such shares). It is also commonly known as stock-divide.

Stock dividend refers to dividend paid to shareholders in form of shares.

Stock splits and stock dividends both increase the number of shares as the company allots shares to the existing shareholders in both the cases and share capital therefore is increased.

So, Statement A and D are absolutely correct.

Now,

Stock splits and stock dividends reduce the market price of the shares as the number of shares increase. But the stock splits do not reallocate the amounts between retained earnings and capital as the retained earnings are not affected by stock splits.

Hence, option 'C' would be the incorrect statement here, and the correct answer.

In case of any doubt, please feel free to comment.

ekkarill92 answered 2 years ago

Which of the following statements is false as per the International Financial Reporting Standards? Multiple Choice...

Which of the following statements is false as per the International Financial Reporting Standards? Multiple Choice Interests received and dividends received are classified as either the operating cash flows or investing cash flows. Bank overdrafts are treated as liabilities. The reversal of impairments is permitted. PP&E can be carried at either historical cost or revalued amount less accumulated depreciation and impairment.

Which of the following statements is false? A Put options increase in value as the stock...

Which of the following statements is false? A Put options increase in value as the stock price falls. B If two call options have different strike prices but are otherwise identical, the call option with the higher strike price has a lower value than the call option with a lower strike price. C A put option cannot be worth more than its strike price. D An American option with an earlier exercise date cannot be worth more than an otherwise...

Cash dividends and stock splits decrease the Retained Earnings account. true or false?

Stock Dividends versus Stock Splits Campbell Company wants to increase the number of shares of its...

Stock Dividends versus Stock Splits Campbell Company wants to increase the number of shares of its common stock outstanding and is considering a stock dividend versus a stock split. The Stockholders’ Equity section of the firm’s most recent balance sheet appeared as follows: Common stock, $10 par, 50,000 shares issued and outstanding $500,000 Additional paid-in capital 750,000 Retained earnings 880,000 Total stockholders’ equity $2,130,000 If a stock dividend is chosen, the firm wants to declare a 100% stock dividend. Because...

Testbank Multiple Choice Question 46 Which of the following statements is false? FICA taxes withheld from...

Testbank Multiple Choice Question 46 Which of the following statements is false? FICA taxes withheld from employees' payroll checks should never be recorded as a liability since the employer will eventually remit the amounts withheld to the appropriate taxing authority. Cash dividends should be recorded as a liability when they are declared by the board of directors. A company may exclude a short-term obligation from current liabilities if the company has a contractual right to defer settlement of the liability...

What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends...

What are stock dividends and stock splits? What are the advantages and disadvantages of stock dividends and splits? When should a stock dividend as opposed to a stock split be used?

Which of the statements regarding performance measurements is false? Multiple Choice A The residual income approach...

Which of the statements regarding performance measurements is false? Multiple Choice A The residual income approach cannot be used to compare the performance of divisions of different sizes. B Turnover is a measure of efficiency and refers to the number of dollars of sales generated by inventory sold. C One of the weaknesses of using ROI for performance measurement is that it may induce managers to make cost-cutting decisions that jeopardize the long-term viability of the segment or corporation. D...

Answer the following statements as true or false, then select the correct multiple -choice answer: 1. If...

Answer the following statements as true or false, then select the correct multiple -choice answer: 1. If dividends are declared during the year the company would close the dividend account by debiting retained earnings and crediting the dividend account. 2. A company that forgets to recognize depreciation for the year understates its income and assets. 3. Prepaid insurance expense will have a zero balance on the after closing trial balance. 4. Retained earnings on an adjusted trial balance is the beginning retained earnings for...

Which of the following statements about utilization of a resource is TRUE? Multiple Choice It is...

Which of the following statements about utilization of a resource is TRUE? Multiple Choice It is at its maximum when the flow rate exceeds its capacity It is at its maximum when the flow rate is equal to its capacity. It is at its minimum when the flow rate exceeds its capacity. It is at its minimum when the flow rate is equal to its capacity

Which of the following statements about recourse is (are) true? Multiple Choice The buyer of the...

Which of the following statements about recourse is (are) true? Multiple Choice The buyer of the mortgage can require the mortgage seller to repay the mortgage if the homeowner defaults. Most mortgage sales are with recourse. The homeowner can direct who the mortgage service provider is. The seller of the mortgage is responsible for the interest payments only. The mortgage seller must make all the monthly payments.

Question