A feature common to both stock splits and stock dividends is
A) a transfer to earned capital of a corporation.
B) that there is no effect on total shareholders' equity.
C) an increase in total liabilities of a corporation.
D) a reduction in the contributed capital of a corporation.

Question

Quizplus · Accepted Answer

Both stock splits and stock dividends do not affect total shareholders' equity. In a stock split, the number of shares outstanding is increased, while the proportionate ownership of each shareholder remains the same. In a stock dividend, additional shares are distributed to shareholders, again without any change in the proportionate ownership. Therefore, there is no impact on the total shareholders' equity of the corporation.

A Feature Common to Both Stock Splits and Stock Dividends