The declaration and issuance of a share dividend
A)increases ordinary shares outstanding and increases total equity.
B)decreases retained earnings but does not change total equity.
C)may increase share premium but does not change total equity.
D)increases retained earnings and increases total equity.

Question

Quizplus · Accepted Answer

A share dividend decreases retained earnings as it is a distribution of earnings to shareholders, but it does not change total equity because it is a reclassification within equity from retained earnings to share capital.

The Declaration and Issuance of a Share Dividend