A large stock dividend:

a. Results in a transfer of retained earnings to common stock and additional paid-in capital.

b. Reduces the par value per share by the percentage of the additional shares issued.

c. Is accounted for in exactly the same manner as a stock split.

d. Results in a transfer of retained earnings to the common stock account.

Question

Business

Jamie

8 June, 21:24

A large stock dividend:

a. Results in a transfer of retained earnings to common stock and additional paid-in capital.

b. Reduces the par value per share by the percentage of the additional shares issued.

c. Is accounted for in exactly the same manner as a stock split.

d. Results in a transfer of retained earnings to the common stock account.

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Charmer · Answer 1

Results in a transfer of retained earnings to common stock and additional paid-in capital.

Explanation:

A stock dividend can be defined as the dividend which is distributed to shareholders on the basis of their percentage of ownership. Stock dividend is paid in form of shares and not in form of cash.

A stock dividend can also be described as a dividend payment paid by a company to its existing stakeholders from the profit or earnings that has been derived from the company during a financial year period.

The main advantage of stock dividend is that taxes will not be paid on the stock dividends until the shares have been sold.