A stock dividend will,in and of itself,affect the amounts in which of the following accounts? (Assume the stock has a par value. )
A) Common stock account.
B) Paid-in capital account.
C) Retained earnings account.
D) Cash.
E) Only answers a,b,and c above.

Question

Quizplus · Accepted Answer

A stock dividend affects the common stock account, as it increases the number of shares outstanding. It also affects the paid-in capital account as the par value of the newly issued shares is transferred to this account. Finally, it affects the retained earnings account as the distribution reduces the balance in this account. Cash is not impacted by a stock dividend as it involves the issuance of additional shares, not the payment of cash.

A Stock Dividend Will,in and of Itself,affect the Amounts in Which