All of the following types of dividends will result in an increase in liabilities as a result of recording the declaration of a dividend except a (Assume the dividends are paid or distributed on a later date.)

Question

Quizplus · Accepted Answer

A stock dividend does not result in an increase in liabilities, as no cash or other asset is being distributed. Rather, the stockholders' equity accounts are affected, as the number of shares outstanding increases while the retained earnings account decreases. The other types of dividends listed all involve the distribution of assets, either cash or property, and therefore will increase liabilities on the company's balance sheet.

All of the Following Types of Dividends Will Result in an Increase