The declaration and distribution of a stock dividend will
A) increase total stockholders' equity.
B) increase total assets.
C) decrease total assets.
D) have no effect on total assets.

Question

Quizplus · Accepted Answer

A stock dividend redistributes a portion of the company's retained earnings to its shareholders in the form of additional shares, rather than cash. This action increases the number of shares outstanding but does not affect the total value of the company's assets. The value is simply spread over a larger number of shares, so the overall stockholders' equity remains the same, and there is no impact on the total assets.

The Declaration and Distribution of a Stock Dividend Will