Which of the following balance sheet accounts will be affected by a stock dividend but not by a stock split?
A) Retained earnings
B) Cash
C) Common stock
D) Dividends-in-arrears

Question

Quizplus · Accepted Answer

A stock dividend is essentially a transfer of retained earnings to the common stock account, which dilutes the value of outstanding shares. Therefore, only retained earnings will be affected by a stock dividend, while cash, common stock, and dividends-in-arrears will not be influenced by it. However, a stock split will adjust the number of outstanding shares, which would not affect any balance sheet accounts.

Which of the Following Balance Sheet Accounts Will Be Affected