When a dividend is declared and paid in stock,
A) total stockholders' equity does not change.
B) total stockholders' equity decreases.
C) the current ratio increases.
D) the amount of working capital decreases.

Question

Quizplus · Accepted Answer

When a dividend is declared and paid in stock, the total number of outstanding shares increases, and the amount of retained earnings decreases. However, this does not affect the total stockholders' equity since it is the sum of the company's assets minus its liabilities, and the value of the assets and liabilities are unchanged.

When a Dividend Is Declared and Paid in Stock