If a corporation declares a 2-for-1 stock split, which of the following is true?

Question

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When a corporation declares a 2-for-1 stock split, it means that each shareholder will receive two shares for every one share they currently own. Here's the impact on the various aspects mentioned in the options:
a. A journal entry is typically not required to show the effect on the stockholders' equity accounts in terms of the total amount. Stock splits do not change the total value of the equity; they just increase the number of shares and decrease the par value per share. However, the company will make a note in the financial statements to reflect the change in the number of shares and the par value.
b. The stockholders will not have a higher proportionate ownership share after the split. Their percentage of ownership remains the same because the split applies equally to all shares. If a shareholder owned 1% of the company before the split, they will still own 1% after the split, just with more shares at a lower par value each.
c. The par value per share will indeed be reduced to half of the pre-split par value. If the par value was $1.00 per share before the split, it would be $0.50 per share after a 2-for-1 split.
d. The market price of the stock is expected to decrease after the split, not increase. The split is designed to make the shares more affordable and increase liquidity in the market. If a stock was trading at $100 per share before the split, theoretically, it would trade at approximately $50 per share after the split. However, the total market value of the shareholder's investment remains the same immediately after the split, assuming no other market factors affect the stock price.

If a Corporation Declares a 2-For-1 Stock Split, Which of the Following