A stock dividend: A) will reduce stockholders equity like a cash dividend does B

Question

A stock dividend: A) will reduce stockholders equity like a cash dividend does B) is accounted for like a stock plit C) will reduce retained earnings like a cash dividend does D) will not change any of the accounts within stockholders equity A stock dividend: A) will reduce stockholders equity like a cash dividend does B) is accounted for like a stock plit C) will reduce retained earnings like a cash dividend does D) will not change any of the accounts within stockholders equity A) will reduce stockholders equity like a cash dividend does B) is accounted for like a stock plit C) will reduce retained earnings like a cash dividend does D) will not change any of the accounts within stockholders equity

Explanation / Answer

When a Company Issues a Stock Dividend the Total Amount of stock holders Equity remains the same. But when a stock dividend issued an amount equal to the fair value of the additional share issued is to transfer from retained earnings to the Capital stock. Which will reduce the retained earning. So the Answer is: Option C: Will reduce retained earnings like a cash dividend does

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