A stock dividend will reduce the amount in the retained earnings section of stockholders' equity, while increasing the amount in the paid-in capital section.

Question

Quizplus · Accepted Answer

A stock dividend is a distribution of additional shares to existing shareholders. This means that the value of the company's retained earnings is being distributed to shareholders in the form of additional shares, which will decrease the amount in the retained earnings section of stockholders' equity. However, since the company is not actually paying any cash to shareholders, the amount in the paid-in capital section of stockholders' equity will increase to reflect the additional shares issued.

A Stock Dividend Will Reduce the Amount in the Retained