Stock dividends and stock splits are similar in all of the following ways except

Question

Stock dividends and stock splits are similar in all of the following ways except:
A) They both involve a pro rats distribution of shares to existing stockholders
B) They both reduce the stock price
C) They both decrease retained earnings
D) Have no effect on cash Stock dividends and stock splits are similar in all of the following ways except:
A) They both involve a pro rats distribution of shares to existing stockholders
B) They both reduce the stock price
C) They both decrease retained earnings
D) Have no effect on cash
A) They both involve a pro rats distribution of shares to existing stockholders
B) They both reduce the stock price
C) They both decrease retained earnings
D) Have no effect on cash

Explanation / Answer

correct option is C" -They both decrease retained earningS

Stock split does not result in reduction of retained earnings .It is generally result in reduction of par value and increase in number of existing shares .

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