Fort Saskatchewan Ltd.is choosing between paying out a stock dividend or a cash dividend.What will be the effect on their total assets of the two choices?
$\begin{array}{ll}&\text { Stock } & \text { Cash } \
&\text { Dividend } & \text { Dividend }\\hline
A.&\text { Unchanged } & \text { Unchanged } \
B.&\text { Unchanged } & \text { Decreased } \
C.&\text { Decreased } & \text { Unchanged } \
D.&\text { Decreased } & \text { Decreased }
\end{array}$

Question

Fort Saskatchewan Ltd.is choosing between paying out a stock dividend or a cash dividend.What will be the effect on their total assets of the two choices? 
$\begin{array}{ll}&\text { Stock } & \text { Cash } \
&\text { Dividend } & \text { Dividend }\\hline 
A.&\text { Unchanged } & \text { Unchanged } \
B.&\text { Unchanged } & \text { Decreased } \
C.&\text { Decreased } & \text { Unchanged } \
D.&\text { Decreased } & \text { Decreased }
\end{array}$

Quizplus · Accepted Answer

A stock dividend does not affect the total assets of a company because it simply reallocates part of the company's retained earnings to common stock. However, a cash dividend results in a decrease in the company's total assets as it involves paying out cash to shareholders.

Fort Saskatchewan Ltd A)Option a B)Option B C)Option C D)Option D

Fort Saskatchewan Ltd A)Option a
B)Option B
C)Option C
D)Option D