A stock dividend ______. (Check all that apply.)Multiple select question.distributes additional shares of stock to existing stockholders on a pro rata basis.causes retained earnings to decrease.increases a stockholders' percentage ownership in the corporation.causes total stockholders' equity to decrease.
Question
A stock dividend ______. (Check all that apply.)Multiple select question.distributes additional shares of stock to existing stockholders on a pro rata basis.causes retained earnings to decrease.increases a stockholders' percentage ownership in the corporation.causes total stockholders' equity to decrease.
Solution
A stock dividend:
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Distributes additional shares of stock to existing stockholders on a pro rata basis. This means that if you own a certain percentage of the company's shares, you will receive the same percentage of the new shares being distributed.
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Causes retained earnings to decrease. This is because the value of the stock dividend is deducted from the company's retained earnings, which are part of its equity.
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Does not increase a stockholders' percentage ownership in the corporation. Although a stockholder receives additional shares, all stockholders receive additional shares proportionally, so the percentage ownership of each stockholder remains the same.
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Does not cause total stockholders' equity to decrease. While the stock dividend does decrease retained earnings, it simultaneously increases common stock by the same amount, so total equity remains the same.
Similar Questions
A stock dividend:Multiple Choiceis accounted for like a stock split.will reduce stockholders' equity similar to a cash dividend.will not change any of the accounts within stockholders' equity.will reduce Retained Earnings similar to a cash dividend.
Multiple Select QuestionSelect all that applyWhat three things make up stockholders' equity?Multiple select question.Dividends yet to be paidCommon stockRetained earningsCorporate business assetsPreferred stock
The declaration and payment of a cash dividend ultimately causes a(n) ______. (Check all that apply.)Multiple select question.increase in Treasury Stockdecrease in Treasury Stockdecrease in Retained Earningsdecrease in Cashdecrease in stockholders' equity
Dividends paid: Group of answer choices increase assets. increase expenses. decrease revenues. decrease retained earnings.
Appropriating retained earnings reduces the amount of retained earnings that are available for the declaration of dividends. This statement is
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