When a corporation records a stock dividend, it decreases Retained Earnings for the par value of the stock.

Question

Quizplus · Accepted Answer

When a corporation records a stock dividend, it does not decrease Retained Earnings for the par value of the stock. Instead, it transfers a portion of the retained earnings to the capital stock account, which increases the number of shares outstanding but does not change the total value of the company.

When a Corporation Records a Stock Dividend, It Decreases Retained