Asked by Petronel Ntimane on May 03, 2024
Verified
A stock split results in a transfer at market value from retained earnings to paid-in capital.
Stock Split
A corporate action in which a company divides its existing shares into multiple shares to boost the liquidity of the shares, although the market capitalization remains the same.
Paid-in Capital
The amount of money that a company has received from shareholders in exchange for shares of stock, beyond the par value of the shares.
- Comprehend the economic implications and accounting methodology for stock splits and stock dividends in relation to a firm’s financial reports.
Verified Answer
ZK
Zybrea KnightMay 07, 2024
Final Answer :
False
Explanation :
A stock split does not result in any transfer of funds between retained earnings and paid-in capital. It simply increases the number of shares outstanding and decreases the stock price proportionally.
Learning Objectives
- Comprehend the economic implications and accounting methodology for stock splits and stock dividends in relation to a firm’s financial reports.
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