While a cash dividend reduces assets, a stock dividend only shuﬄes amounts between shareholders' equity accounts.

Question

Quizplus · Accepted Answer

A cash dividend involves paying out a portion of a company's assets to shareholders, which reduces the company's assets. A stock dividend, on the other hand, involves distributing additional shares of stock to existing shareholders, which does not reduce the company's assets but rather shuffles amounts between shareholders' equity accounts.

While a Cash Dividend Reduces Assets, a Stock Dividend Only