When a company declares a stock dividend,which of the following occurs?
A)A liability is created.
B)Retained earnings is reduced.
C)Stockholders' equity is decreased.
D)The Financing section of the statement of cash flows is decreased.

Question

Quizplus · Accepted Answer

When a company declares a stock dividend, it uses its retained earnings to issue additional shares of stock to its shareholders. This reduces the amount of retained earnings on the balance sheet, but does not create a liability or decrease stockholders' equity. It also does not impact the financing section of the statement of cash flows.

When a Company Declares a Stock Dividend,which of the Following