All of the following statements regarding share dividends are except:
A) Directors can use share dividends to keep the market price of the shares affordable.
B) Share dividends provide evidence of management's confidence that the company is doing well.
C) Share dividends do not reduce assets or equity.
D) Share dividends decrease the number of shares outstanding.
E) Share dividends transfer a portion of equity from retained earnings to contributed capital.

Question

Quizplus · Accepted Answer

Share dividends do not decrease the number of shares outstanding. Instead, they distribute a portion of profits to shareholders in the form of additional shares or cash payments. This means that the number of shares outstanding remains the same, but the ownership percentage of each shareholder may change.

All of the Following Statements Regarding Share Dividends Are Except