A 2-for-1 stock split is declared. In this case, which of the following statements is true?
A) The cash account declines.
B) The common stock account rises.
C) The retained earnings fall.
D) The par value of the common stock is reduced.

Question

Quizplus · Accepted Answer

In a 2-for-1 stock split, the company reduces the par value of its common stock to half its original amount but doubles the number of shares, keeping the total value of shares the same. This action does not affect the cash account, common stock account in terms of total value, or retained earnings.

A 2-For-1 Stock Split Is Declared