Question

The effect of a stock dividend on the financial statement is to: a. Increase the market...

The effect of a stock dividend on the financial statement is to:

a. Increase the market value per share of common shares.

b. Change the account balances within

c. Decrease total assets and total liabilities.

d. Decrease total assets and stockholders' equity.

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Answer #1

When a stock dividend is declared the total amount to be debited to reatined earnings is calculated by multiplying current market price per share by the dividend percentage and by the number of shares outstanding.if a company declares stock dividend, the dividend reduce the company's reatined earnings and increase the common stock account.stock dividend do not result in assests change of balance sheet but rather affect only equity side by reallocating part of retained earnings to common stock account.stock dividend has only impact on shareholders equity section of the balance sheet

Therefore from the above OPTION B Is correct CHANGE THE ACCOUNT BALANACES WITHIN

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