Answer:
B
Step-by-step explanation:
A stock split is when a company increases the number of its shares outstanding by a constant proportion
for example, if a company has 50,000 shares outstanding at a price of $25, earning per share is $1 and dividend per share is $2. this company announces a 2 for 1 split:
the number of outstanding shares becomes 2 x 50,000 = 100,000
stock price becomes = $25 / 2 =$12.5
earnings per share = $1 / 2 = $0.50
dividend per share = $2 / 2 = $1
Market value = $120 / 2 = 60
After a stock split, the price of the shares falls. so it can be used to adjust the market price of a stock so it falls within a preferred trading range.
A stock split doesn't affect the balances in shareholders equity account.
Stock split doesn't affect the cash holdings of the firm.