What would be the effect of a stock dividend on the accounts of the company?
A) an increase in current liabilities upon declaration
B) an increase in retained earnings upon declaration
C) a decrease in retained earnings upon declaration
D) an increase in shareholders' equity upon declaration

Question

Quizplus · Accepted Answer

A stock dividend results in a decrease in retained earnings because the value of the dividend is transferred out of retained earnings and into paid-in capital, reflecting the distribution of additional shares to shareholders.

What Would Be the Effect of a Stock Dividend on the Accounts