Use the following information for questions 68 and 69.
The balance in retained earnings at December 31, 2014 was $1,080,000 and at December 31, 2015 was $873,000. Net income for 2015 was $750,000. A stock dividend was declared and distributed which increased common stock $375,000 and paid-in capital $165,000. A cash dividend was declared and paid.
-The stock dividend should be reported on the statement of cash flows (indirect method) as
A) an outflow from financing activities of $375,000.
B) an outflow from financing activities of $540,000.
C) an outflow from investing activities of $540,000.
D) Stock dividends are not shown on a statement of cash flows.

Question

Quizplus · Accepted Answer

Stock dividends do not affect cash flow and are therefore not reported on the statement of cash flows. They involve the transfer of amounts from retained earnings to common stock and additional paid-in capital, but do not involve the movement of cash.

Use the Following Information for Questions 68 and 69