The effect of a stock dividend is to
A) decrease total assets and shareholders' equity.
B) change the composition of shareholders' equity.
C) decrease total assets and total liabilities.
D) increase total shareholders' equity.

Question

Quizplus · Accepted Answer

A stock dividend changes the composition of shareholders' equity by transferring a portion from retained earnings to common stock, but it does not change the total amount of shareholders' equity or total assets.

The Effect of a Stock Dividend Is to