Which of the following is true with regard to a stock dividend?
A)It results in a transfer of retained earnings to contributed capital.
B)It increases the number of shares outstanding and involves a pro rata reduction in the par value per share.
C)It is accounted for in exactly the same manner as a stock split.
D)It does not require a journal entry.

Question

Quizplus · Accepted Answer

A stock dividend results in a transfer of retained earnings to contributed capital, as it involves issuing additional shares to shareholders, thereby capitalizing a portion of retained earnings.

Which of the Following Is True with Regard to a Stock