Which of the following is NOT a correct statement regarding a stock split?
A)There is no effect on retained earnings account
B)Investors face no tax implications
C)The average share price will be reduced to reflect the split
D)There will be no change in the number of shares outstanding

Question

Quizplus · Accepted Answer

A stock split involves increasing the number of shares outstanding while decreasing the share price proportionally. Therefore, there will be a change in the number of shares outstanding. A stock split has no effect on retained earnings account and does not result in any tax implications for investors. The average share price will be reduced to reflect the split.

Which of the Following Is NOT a Correct Statement Regarding