The dollar amount of total stockholders' equity remains the same when there is a (an)
A) Issuance of preferred stock in exchange for convertible debentures
B) Issuance of nonconvertible bonds with detachable stock purchase warrants
C) Declaration of a stock dividend
D) Declaration of a cash dividend

Question

Quizplus · Accepted Answer

When a stock dividend is declared, the company is essentially transferring a portion of retained earnings to the common stock account, without affecting the total stockholders' equity. Therefore, the dollar amount of total stockholders' equity remains the same. Choices A, B, and D involve transactions that affect either the assets or liabilities of the company, which could impact the total stockholders' equity.

The Dollar Amount of Total Stockholders' Equity Remains the Same