Unlike a stock split,a stock dividend requires a formal journal entry in the financial accounting records because stock dividends
A) represent a transfer from Retained Earnings to Capital Stock.
B) increase the stockholders' equity in the issuing firm.
C) are payable on the date they are declared.
D) increase the relative book value of an individual's stock holdings.

Question

Quizplus · Accepted Answer

Stock dividends require a formal journal entry because they represent a transfer from Retained Earnings to Capital Stock. This involves moving amounts within the equity section of the balance sheet from retained earnings to paid-in capital, reflecting the issuance of additional shares to existing shareholders.

Unlike a Stock Split,a Stock Dividend Requires a Formal Journal