A stock dividend is recorded with a transfer from:
A)Contributed capital to retained earnings.
B)Retained earnings to paid-in capital.
C)Retained earnings to assets.
D)Contributed capital to assets.
E)Assets to contributed capital.

Question

Quizplus · Accepted Answer

A stock dividend is a distribution of additional shares of stock to existing shareholders. This does not result in any change to the total amount of retained earnings or assets of the company. Instead, the stock dividend is recorded as a transfer from retained earnings to paid-in capital, as it represents a portion of the company's earnings that are being returned to shareholders in the form of additional shares of stock. This transfer reduces retained earnings and increases the amount of paid-in capital on the balance sheet.

A Stock Dividend Is Recorded with a Transfer From