When a corporation issues a stock dividend, which of the following is true?

Question

Quizplus · Accepted Answer

When a corporation issues a stock dividend, there is no cash outflow, so cash does not decrease. Instead, the corporation transfers a portion of retained earnings to the common stock or additional paid-in capital account, which increases the total number of outstanding shares. However, since the proportional ownership of each shareholder remains the same, the total stockholders' equity remains the same. Therefore, the correct answer is B.

When a Corporation Issues a Stock Dividend, Which of the Following