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Homework answers / question archive / What effect occurs when a stock split is declared? Total assets and total stockholders' equity increase

What effect occurs when a stock split is declared? Total assets and total stockholders' equity increase

Accounting

What effect occurs when a stock split is declared?

    1. Total assets and total stockholders' equity increase.
    2. Part of retained earnings is transferred to paid-in capital.
    3. The par value decreases and the number of shares increase.
    4. Ownership interests of each stockholder are increased.

 

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Answer: c .

Explanation:

Stock split is a phenomena where in the company splits its shares thereby leading to increase in no.of shares with the shareholders,at the same time the par value is decreased.

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