How does the declaration and distribution of a stock dividend affect a firm?
A)decreases stockholders' equity
B)increases stockholders' equity
C)no change in total stockholders' equity or assets
D)decreases total stockholders' equity and total assets

Question

Quizplus · Accepted Answer

Stock dividends redistribute a portion of a company's earnings back to its shareholders in the form of additional shares, rather than cash. This action does not affect the total stockholders' equity or the company's total assets, as it simply reallocates part of the retained earnings to common stock.

How Does the Declaration and Distribution of a Stock Dividend