A stock dividend:
A)is the same thing as a stock split.
B)will reduce shareholders' equity just like a cash dividend.
C)will not change any of the accounts within shareholders' equity.
D)will reduce retained earnings just like a cash dividend.

Question

Quizplus · Accepted Answer

A stock dividend is an issuance of additional shares to existing shareholders of a company, which increases the total number of outstanding shares. This type of dividend does not reduce shareholders' equity, but it does decrease retained earnings, which is a component of shareholders' equity. It is not the same as a stock split, which increases the number of shares outstanding but does not involve the issuance of additional shares to existing shareholders.

A Stock Dividend