An effect of a bonus issue to all shareholders is to:
A) increase the total amount of shareholders' funds.
B) make the amount that was previously recorded as retained earnings no longer available for the payment of cash dividends.
C) alter the current shareholders' proportionate share of the company's net assets.
D) increase the total assets of the company.

Question

Quizplus · Accepted Answer

A bonus issue involves converting retained earnings into share capital, which means the amount previously available as retained earnings for cash dividends is now represented as share capital. This does not increase total shareholders' funds, total assets, or alter the proportionate share of net assets among existing shareholders.

An Effect of a Bonus Issue to All Shareholders Is