When a share dividend of 20 000 $1 shares, is declared and paid, the effect on total equity in the company balance sheet is a(n):

Question

Quizplus · Accepted Answer

When a share dividend is declared and paid, it means the company is distributing its earnings to shareholders in the form of additional shares. This has no impact on the total equity of the company as the increase in share capital is offset by a corresponding decrease in reserves. Therefore, there is no change in total equity. Option B is incorrect as there is no increase in total equity. Option C is also incorrect as there is no decrease in total equity. Option D is also incorrect as there is no increase in the number of issued shares, only a distribution of existing shares.

When a Share Dividend of 20 000 $1 Shares, Is