How does the declaration and distribution of a 10% stock dividend affect stockholders' equity?

Question

Quizplus · Accepted Answer

Declaration and distribution of a stock dividend will not affect the total stockholders' equity, but it will change the balances of different accounts within the equity section. The retained earnings account will be reduced, as that amount will be distributed to stockholders as dividend, and the common stock account will increase by the same amount. However, the total amount of stockholders' equity will remain the same. Therefore, choice C is the correct answer.

How Does the Declaration and Distribution of a 10% Stock