The effect of a stock dividend is to
A) change the composition of shareholders' equity.
B) decrease total assets and shareholders' equity.
C) decrease total assets and total liabilities.
D) increase the book value per share of common shares.

Question

Quizplus · Accepted Answer

A stock dividend redistributes the company's retained earnings to the common stock and additional paid-in capital accounts within shareholders' equity, changing its composition but not the total equity. It does not affect total assets, total liabilities, or the book value per share.

The Effect of a Stock Dividend Is to