A 100% stock dividend and a 2 for 1 stock split are similar in that:
A)the par value of the company's stock will be cut in half
B)the number of shares of stock outstanding will double
C)total stockholders' equity will remain unchanged
D)both b and c are correct

Question

Quizplus · Accepted Answer

A 100% stock dividend means that for every share of stock an investor owns, they will receive an additional share. This effectively doubles the number of shares outstanding, which is the same effect as a 2-for-1 stock split. Both of these actions do not affect the total stockholders' equity since the company is not issuing any additional capital. Therefore, both the statements that the number of shares of stock outstanding will double (b) and total stockholders' equity will remain unchanged (c) are correct. Choice (A) is incorrect because the par value of the company's stock will not be affected by either action.

A 100% Stock Dividend and a 2 for 1 Stock