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 amounts from retained earnings to paid-in capital, but it does not change the total amount of shareholders' equity or affect total assets and total liabilities. It also does not increase the book value per share since it distributes additional shares to shareholders, diluting the value per share.

The Effect of a Stock Dividend Is to