41. When a company splits its common stock 3 for 1: A. total paid-in capital inc

Question

41. When a company splits its common stock 3 for 1:
A. total paid-in capital increases by a factor of 3.
B. the balance in the retained earnings account is decreased by the market value of the shares issued.
C. the market value of the company's stock falls by two-thirds.
D. the shareholders are assured of receiving larger cash dividends.

46. Which of the following is an accurate statement regarding a statement of cash flows?

A. Only cash items that affect the income statement are included.

B. Only material cash items that affect the income statement are included.

C. Material non-cash transactions are included.

D. Immaterial financing activities that affect cash do not need to be included.E. None of the above.

40. When a stock dividend is declared and issued:
A. total paid-in capital does not change.
B. total owners' equity does not change.
C. the balance in the retained earnings account is decreased by the par value of the shares issued in the dividend.
D. total paid-in capital is decreased by the market value of the shares issued in the dividend.

Explanation / Answer

46. In the statement of cash flows the material non cash transactions are included. The transactions that are not in cash.

The correct option is

C. Material non-cash transactions are included.W

When stock dividend is declared and issued

Retained Earning Dr ( The shares* market value)

To Common stock dividend ( Par Value)

To Paid in capital in excess of par

The correct option is

the balance in the retained earnings account is decreased by the par value of the shares issued in the dividend.

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