The effect of a stock dividend is to
A) decrease total assets and stockholders' equity.
B) change the composition of stockholders' equity.
C) decrease total assets and total liabilities.
D) increase the book value per share of common stock.

Question

Quizplus · Accepted Answer

A stock dividend does not affect total assets or liabilities. However, it does change the composition of stockholders' equity by increasing the number of shares outstanding and decreasing the retained earnings account. This results in a decrease in the book value per share of common stock.

The Effect of a Stock Dividend Is to