Question

Unlike a stock dividend, a stock split _____. multiple choice is always recorded at market value does not change total stockholders' equity reduces the par value of the stock increases the total number of shares outstanding

Answer 1

Answer:

reduces the par value of the stock.

Explanation:

A stock is also referred to as equity and it can be defined as a security that represents a stockholder's ownership of a fraction of a corporation.

The par value of a stock is its face value and it comprises of its total dollar amount as well as its maturity value. Also, the par value of a stock gives the basis on which periodic interest is paid.

A stock is issued at par value when the market rate of interest is the same as the contract rate of interest. This simply means that, a stock would be issued at par (face) value when the stock's stated rated is significantly equal to the effective or market interest rate on the specific date it was issued.

Stockholders' equity can be defined as the amount of assets remaining or the residual interest of assets in a business after all liabilities are settled or deducted. A stockholders' equity is calculated by deducting or subtracting the value of liabilities from the value of assets on the balance sheet of a company.

Additionally, statement of changes in stockholders' equity is a financial statement that illustrate a summary of the changes in shareholders' equity (gains and losses that increase or decrease stockholders' equity respectively) over the reporting period.

In Trading and securities, a stock split reduces the par value of the stock whereas a stock dividend increases the par value of a stock.