The declaration and issuance of a stock dividend does not affect the total amount of a corporation's assets, liabilities, or stockholders' equity.

Question

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When a corporation issues a stock dividend, it reallocates a portion of its retained earnings to its stockholders. This does not affect the total amount of the corporation's assets, liabilities, or stockholders' equity, as the retained earnings are simply being distributed among the stockholders in the form of additional shares. Therefore, the total value of the corporation's assets, liabilities, and equity remain the same.

The Declaration and Issuance of a Stock Dividend Does Not