If a corporation declares a 10% stock dividend on its common shares, the account to be debited on the date of declaration is
A)Stock Dividends Distributable.
B)Common Shares.
C)Share Capital.
D)Dividends Declared.

Question

Quizplus · Accepted Answer

When a corporation declares a stock dividend, it is essentially declaring a dividend that will be paid out in the form of additional shares rather than cash. The account that gets debited to reflect this declaration is "Dividends Declared" (or a similar account), as this represents the company's commitment to distribute additional shares to shareholders. This entry recognizes the liability the company has incurred by declaring the dividend.

If a Corporation Declares a 10% Stock Dividend on Its