The declaration and issuance of a stock dividend:
A)increases total shareholders' equity.
B)does not change total shareholders' equity.
C)increases current liabilities.
D)does not change total retained earnings.

Question

Quizplus · Accepted Answer

DA stock dividend involves the distribution of additional shares to existing shareholders, which reallocates a portion of retained earnings to common stock. However, it does not change the total shareholders' equity because it simply transfers amounts within shareholders' equity. It also does not affect current liabilities or increase total retained earnings, as it reallocates existing retained earnings rather than adding to them.

The Declaration and Issuance of a Stock Dividend