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Iris Software's board approves a 2-for-1 stock split while total equity is stable. A trainee expects assets and retained earnings to increase because shareholders receive more shares. Which effect is most accurate?
Assets increase because each shareholder receives additional shares.
Retained earnings increase because the split is a distribution of accumulated profits.
The number of shares increases and par value per share decreases; total assets and total equity do not increase.
Liabilities decrease because the market price per share usually falls.
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