Select the effect (a, b, or c) that each transaction listed in would most likely cause on the debt/equity ratio.
-Declared and paid a 200% stock dividend

Question

Quizplus · Accepted Answer

A 200% stock dividend results in the issuance of additional shares to existing shareholders, which does not affect the total equity (just redistributes it among a larger number of shares) nor does it change the total debt. Therefore, the debt/equity ratio remains unchanged.

Select the Effect (A, B, or C) That Each Transaction