If management wishes to "capitalize" part of the earnings, it may issue a
A) cash dividend.
B) stock dividend.
C) property dividend.
D) liquidating dividend.

Question

Quizplus · Accepted Answer

If management wishes to capitalize part of the earnings, it may issue a stock dividend. This means that instead of distributing cash or other assets to shareholders, the company issues additional shares of stock to its existing shareholders. This has the effect of diluting the value of existing shares, but it allows the company to retain more cash or assets to reinvest in its operations.

If Management Wishes to "Capitalize" Part of the Earnings, It