The correct answers are:
a - (i) A scrip issue converts equity reserves into share capital.
b - (ii) A stock split leaves reserves unaffected.
A scrip issue is a bonus issue of shares (free shares) to shareholders in lieu of a cash dividend.
A stock split splits the nominal value of shares to increase marketability. For example £1 nominal value share can be split into 10 shares with a nominal value of 10 pence per share. This does not affect reserves.
