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

Question

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

Quizplus · Accepted Answer

The declaration of a stock dividend does not affect total current liabilities or total stockholders' equity. It merely reallocates amounts within the equity section from retained earnings to common stock and additional paid-in capital.

How Will a Company's Total Current Liabilities and Total Stockholders