A stock dividend:
A)is accounted for like a stock split.
B)will reduce stockholders' equity similar to a cash dividend.
C)will not change any of the accounts within stockholders' equity.
D)will reduce Retained Earnings similar to a cash dividend.

Question

Quizplus · Accepted Answer

Both a stock dividend and a cash dividend reduce Retained Earnings.However,stock dividends are recorded by transferring an amount from Retained Earnings to contributed capital accounts.This changes the composition of stockholders' equity,not the total amount.A stock split is not the same as a stock dividend;no journal entry is recorded for a stock split.

A Stock Dividend