Question : Learning Objective 8-4 1) A corporation’s distribution of new shares of : 1253374

 

Learning Objective 8-4

 

1) A corporation’s distribution of new shares of stock to the corporation’s current shareholders is called a ________.

A) cash dividend

B) liquidating dividend

C) stock dividend

D) stock split

 

2) A ________ is created when a corporation increases the number of shares and proportionately decreases the par value.

A) cash dividend

B) liquidating dividend

C) stock dividend

D) stock split

3) Issuing a stock dividend ________.

A) decreases total shareholders’ equity

B) does not increase any shareholder’s percentage of ownership in the company

C) increases total shareholders’ equity

D) decreases total assets

 

4) Team Shirts issued a 10% stock dividend. The balance in retained earnings just before the dividend was $45,000. There were 15,000 shares outstanding on the day of the dividend. The $1 par value stock had a market price of $17.25 on the day of the dividend. Total shareholders’ equity will increase (decrease) by ________.

A) $4,500

B) $1,500

C) $25,875

D) $0

 

5) Team Shirts issued a 2-for-1 stock split. Just before the split, Team Shirts had 100,000, $1 par value common shares outstanding. After the split, Team Shirts had ________ outstanding.

A) 50,000 common shares

B) 100,000 common shares

C) 200,000 common shares

D) 100,000 shares of preferred stock and 100,000 shares of common stock

 

6) Team Shirts issued a 2-for-1 stock split. Before the split, Team Shirts had 100,000, $1 par value common shares outstanding. After the split, the par value of each common share is ________.

A) $2.00

B) $1.00

C) $0.50

D) unable to be determined since it is determined by the market not the corporation

7) Team Shirts issued a 2-for-1 stock split. The balance in retained earnings just before the split was $45,000. There were 15,000 shares outstanding on the day of the split. The $1 par value stock had a market price of $17.25 on the day of the split. Retained earnings will increase (decrease) after the split by ________.

A) $4,500

B) $1,500

C) $25,875

D) $0

 

8) A stock split ________ total shareholders’ equity.

A) increases

B) decreases

C) has no effect on

D) increases both total assets and

 

9) Corporations split stock because ________.

A) a stock split increases shareholders’ equity

B) a stock split will decrease the market price per share of stock

C) a stock split will decrease the number of shares outstanding

D) a stock split will increase total assets

 

10) Which of these will decrease the par value of a corporation’s common stock?

A) a stock split

B) paying a stock dividend

C) paying a cash dividend

D) buying treasury stock

 

11) How many of these will decrease a corporation’s retained earnings?

? a stock split

? paying a stock dividend

? paying a cash dividend

? buying treasury stock

A) one

B) two

C) three

D) all four

12) Stock splits occur when a corporation increases the number of shares and proportionately decreases the par value.

 

13) Stock splits occur when a corporation wants to decrease the market price per share of its stock.

 

14) Stock splits occur when a corporation wants to increase the market price per share of its stock.