A feature common to both stock splits and stock dividends is
A) A transfer to earned capital of a corporation.
B) No impact on total stockholders' equity.
C) An increase in total liabilities of a corporation.
D) A reduction in the contributed capital of a corporation.

Question

Quizplus · Accepted Answer

Both stock splits and stock dividends do not impact the total stockholders' equity of the corporation because the increase in the number of shares is offset by a decrease in the par value or an increase in the number of shares respectively, resulting in no net change in the contributed capital of the corporation. Option A is not correct as stock dividends result in a transfer from retained earnings, not earned capital. Option C and D are not correct as no change is made to the liabilities or contributed capital of the corporation.

A Feature Common to Both Stock Splits and Stock Dividends