Final answer:
A stock split increases the number of shares outstanding but does not change the total dollar amount in the common stock account or increase corporate wealth. It is not treated the same as a stock dividend and does not reduce retained earnings.
Step-by-step explanation:
A stock split is a corporate action where a company divides its existing shares into multiple shares. Although the number of shares outstanding increases by a specific multiple, the total dollar value of the shares remains the same, meaning that the split does not change the total market capitalization of the company. The direct effect of a stock split is a reduction in the market price of the stock, making the shares seem more affordable to small investors even though the underlying value of the company has not changed. Now let's address the options: a. A stock split is not treated like a stock dividend by accountants. Stock dividends distribute additional shares to shareholders, thereby diluting the share value, but they do represent a distribution of additional equity, whereas a stock split is purely a division of existing equity. b. A stock split does not reduce the retained earnings account because it is merely dividing the existing equity into greater numbers of shares, not distributing any additional value. c. A stock split does not change the total dollar amount in the common stock account because it is a division of the existing shares rather than an issuance of new value. d. A stock split does not increase corporate wealth. The total value of the company remains the same before and after the split, because the split does not create any new assets or value, but merely alters the number of shares through which that fixed value is distributed.