The declaration and issuance of a stock dividend on shares of common stock:
A) Has no effect on assets, liabilities, or total shareholders' equity.
B) Decreases total shareholders' equity and increases common stock.
C) Decreases assets and decreases total shareholders' equity.
D) Does not change retained earnings or paid-in capital.

Question

Quizplus · Accepted Answer

A stock dividend involves transferring amounts from retained earnings to common stock, but it does not change the total shareholders' equity, nor does it affect the company's assets or liabilities.

The Declaration and Issuance of a Stock Dividend on Shares