Question

When a company issues a stock dividend which of the following would not be affected?

a) Total Shareholders' equity

b) Total assets

c) Total liabilities

d) All of the above

Answer 1

Solution:
	Answer is d) All of the above
Working Notes:
	When a company issues a stock dividend, company's retained earnings will reduced and common stock paid at par will increase, since, both the accounts at part of Total Shareholders' equity, hence, net effect on Total Shareholders' equity will be nil, (not affected).
	And due to issuance of stock dividend , there will effect on Total assets & total liabilities, as in the stock dividend only no of shares increase , in which retained earnings will be converted into common stock .
Hence,	Issuance of a stock dividend would not affect all of the given totals.
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