Which of the following statements regarding stock splits is incorrect? O A. A st

Question

Which of the following statements regarding stock splits is incorrect? O A. A stock split increases total owners' equity. O B. A stock split decreases the market price of the shares. O C. A stock split involves a reduction in the share's issue value. D. A stock split is an increase in the number of authorized, issued, and outstanding shares. The payment of a cash dividend previously recorded: A. O B. ° C. D. increases liabilities and increases assets increases shareholders' equity and reduces liabilities reduces liabilities and reduces assets reduces shareholders' equity and reduces assets A stock dividend will: 0 A. have no effect on total assets O B. increase total owners' equity ° C. reduce total assets 0 D. have no effect on total assets or total owners' equity The number of shares currently in the hands of shareholders is the same as the number of shares: A. proposed by the board of directors OB. authorized O C. outstanding O D. issued Which of the following is not a characteristic that distinguishes corporations from proprietorships and partnerships? A. O B. ° C. D. Corporate earnings are subject to double taxation. Corporations have mutual agency. Corporations are separate legal entities apart from the owners. Corporations have continuous lives regardless of changes in ownership.

Explanation / Answer

Dear student, only one question is allowed at a time. I am answering the first question

A stock split is division of the value of stock into smaller components

A stock split does not result in increase in owner’s equity as the owner equity remains same but the number of shares increase. So, option A is incorrect

A stock split decreases the market price of shares and results in a reduction of the share’s issue value. So, option B and C are correct

A stock split results in and increase in number of shares of a company. So, option D is also correct

So, option A is the correct option

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