Which of the following statements is correct?

Question

Quizplus · Accepted Answer

When a stock dividend is distributed, no assets leave or enter the corporation. This is because the dividend is paid by distributing additional shares of the company's stock to shareholders, rather than by paying out cash or assets. Choices A, C, and D are incorrect because the Common Stock Dividends Distributable account is typically shown as an equity account, not a liability; the total amount debited to Retained Earnings is typically the fair market value of the shares to be issued, not the par value or stated value; and the total amount of the dividend is typically credited to the Common Stock account, not debited.

Which of the Following Statements Is Correct