A stock split involves increasing the number of outstanding shares while decreasing the par value per share, which does not affect the total book value of any of the equity accounts. The total book value remains the same, but the per-share book value and market price typically decrease to make shares more accessible to investors. Therefore, options A, B, D, and E are incorrect.

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A Stock Split

Question 51

Multiple Choice

A stock split:

A) increases the total book value of the common stock account.
B) decreases the book value of the retained earnings account.
C) does not affect the total book value of any of the equity accounts.
D) increases the book value of the capital in excess of par account.
E) decreases the total owners' equity on the balance sheet.

Correct Answer: