Which of the following statements about stock dividends is true?
A)Stock dividends increase the number of shares outstanding.
B)Stock dividends are more valuable than stock splits.
C)Stock dividends are recorded as a reduction in cash.
D)Stock dividends are dividends given in the form of stock from another company.

Question

Quizplus · Accepted Answer

Stock dividends increase the number of shares outstanding as they are paid out in the form of additional shares of common stock rather than in cash. This means that shareholders will own a larger percentage of the company but the overall value of their investment will remain the same.

Which of the Following Statements About Stock Dividends Is True