Which of the following statements concerning stock dividends is correct?
A)A stock dividend cannot use treasury stock.
B)The issuance of a stock dividend increases total stockholders' equity.
C)The declaration of a stock dividend should not be recorded as a liability even though it has not yet been issued.
D)Courts generally have held that stock dividends, once declared, are irrevocable by the board of directors; therefore, a stock dividend declared, but not yet issued is a liability.

Question

Quizplus · Accepted Answer

The declaration of a stock dividend is not recorded as a liability because it represents a reallocation of amounts within shareholders' equity, not an obligation to pay cash or other assets.

Which of the Following Statements Concerning Stock Dividends Is Correct