Stock dividends do not involve any cash distribution, so they do not affect the total assets or liabilities of the corporation. However, they increase the number of shares outstanding, resulting in a lower value per share but maintaining the same proportional ownership of the company, so they do not affect the total shareholders' equity.

Solved

Stock Dividends

Question 60

Multiple Choice

Stock dividends:

A) are distributions of cash to the shareholders
B) reduce the total assets of the corporation
C) have no effect on total shareholders' equity
D) increase the total liabilities of the corporation, and decrease the total shareholders' equity

Correct Answer: