Which of the following account balance changes occur as a result of a large stock dividend?
I.increase in common stock
II.decrease in capital in excess of par
III.increase in capital in excess of par
IV.decrease in retained earnings
A)I and III only
B)II and IV only
C)I and IV only
D)II and III only
E)I, III, and IV only

Question

Quizplus · Accepted Answer

A large stock dividend results in an increase in common stock (I) and a decrease in retained earnings (IV) but does not affect capital in excess of par. In fact, capital in excess of par may increase due to the larger number of shares issued, resulting in a lower par value per share. Therefore, II is incorrect and III is not applicable. Hence, the correct answer is C (I and IV only).

Which of the Following Account Balance Changes Occur as a Result