A stock split results in a transfer of the market value of the stock from Retained Earnings to Contributed Capital.

Question

Quizplus · Accepted Answer

A stock split does not result in a transfer of market value from Retained Earnings to Contributed Capital. Instead, it results in an increase in the number of outstanding shares, and a proportionate decrease in the share price. The overall market value of the stock remains the same, but the number of shares outstanding increases.

A Stock Split Results in a Transfer of the Market