Which of the following describes the effect of a share dividend?
A)A share dividend immediately increases the market price of a share.
B)A share dividend immediately decreases the paid-in capital account.
C)A share dividend immediately increases the number of shares outstanding.
D)A share dividend indicates that the company must be short on cash.

Question

Quizplus · Accepted Answer

A share dividend immediately increases the number of shares outstanding, meaning that each shareholder now owns a slightly smaller percentage of the company. It does not necessarily have a direct effect on the market price of a share, the paid-in capital account, or indicate that the company is short on cash.

Which of the Following Describes the Effect of a Share