How will a company's working capital and total stockholders' equity be affected by the recording of the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.) $\begin{array}{lll}
& \text { Working Capital}& \text { Total Stockholders Equity}\
\text { I. } & \text { decrease } & \text { decrease } \
\text { II. } & \text { decrease } & \text { no effect } \
\text { III. } & \text { no effect } & \text { no effect }\
\text { III. } & \text { no effect } & \text { decrease }
\end{array}$

Question

How will a company's working capital and total stockholders' equity be affected by the recording of the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.) $\begin{array}{lll}
& \text { Working Capital}& \text { Total Stockholders Equity}\ 
 \text { I. } & \text { decrease } & \text { decrease } \
\text { II. } & \text { decrease } & \text { no effect } \
\text { III. } & \text { no effect } & \text { no effect }\
\text { III. } & \text { no effect } & \text { decrease }
\end{array}$

Quizplus · Accepted Answer

The declaration of a stock dividend does not affect working capital because it involves only equity accounts, and it does not immediately affect total stockholders' equity because it reallocates amounts within equity.

How Will a Company's Working Capital and Total Stockholders' Equity