Prezario's has 225,000 shares of stock outstanding with a par value of $1.00 per share. The current market value of the firm is $1,690,000. The company just announced a 2-for-1 stock split. By how much does the common stock account balance change after the split?

Question

Quizplus · Accepted Answer

The common stock account balance is determined by the par value per share multiplied by the number of shares outstanding. A stock split increases the number of shares but does not change the total par value of the stock outstanding. Therefore, the common stock account balance remains unchanged.

Prezario's Has 225,000 Shares of Stock Outstanding with a Par