A feature common to both stock splits and stock dividends is
A) a transfer to earned capital of a corporation.
B) that there is no effect on total stockholders' equity.
C) an increase in total liabilities of a corporation.
D) a reduction in the contributed capital of a corporation.

Question

Quizplus · Accepted Answer

Both stock splits and stock dividends do not have any effect on the total stockholders' equity of a corporation. However, stock splits increase the number of shares outstanding and decrease the par value per share, while stock dividends distribute additional shares to shareholders. Neither of these actions affects the total amount of equity in the business. Choices A, C, and D do not apply to either stock splits or stock dividends.

A Feature Common to Both Stock Splits and Stock Dividends