Which of the following correctly describes the affect of declaring and distributing a common stock dividend?
A)Total stockholders' equity decreases.
B)Total stockholders' equity remains the same.
C)The number of shares outstanding increases while the par value of each share decreases.
D)The number of shares outstanding decreases while the par value of each share increases.

Question

Quizplus · Accepted Answer

The declaration and distribution affects stockholder equity accounts only; retained earnings decreases, common stock and capital in excess of par increases in total by an amount equal to the retained earnings decrease.

Which of the Following Correctly Describes the Affect of Declaring