The effect of a stock dividend is to
A) decrease total assets and shareholders' equity.
B) change the composition of shareholders' equity.
C) decrease total assets and total liabilities.
D) increase the book value per share of common shares.

Question

Quizplus · Accepted Answer

A stock dividend changes the composition of shareholders' equity by transferring a portion of retained earnings to common stock and additional paid-in capital, but it does not affect total assets, liabilities, or the book value per share.

The Effect of a Stock Dividend Is to