A corporation's distribution of additional shares of its own stock to its stockholders without the receipt of any payment in return is called a:
A)Stock dividend.
B)Stock subscription.
C)Premium on stock.
D)Discount on stock.
E)Treasury stock.

Question

Quizplus · Accepted Answer

The distribution of additional shares of a corporation's own stock to its stockholders without the receipt of any payment in return is called a stock dividend. This is different from a stock subscription, which is an agreement to purchase shares at a later date, and premium or discount on stock, which refers to the difference between the stock's market price and its face value. Treasury stock, on the other hand, refers to shares that have been repurchased by the issuing corporation and are being held in its treasury.

A Corporation's Distribution of Additional Shares of Its Own Stock