Financial Question
Not what you're looking for?
Which of the following is not a direct result of a stock dividend?
a. the number of shares outstanding is increased
b. the market share of each outstanding share is increased
c. the amounts shown in the firm's capital accounts are redistributed
d. a and b
Purchase this Solution
Solution Summary
This solution provides the best answer and explanation for the following question: Which of the following is not a direct result of a stock dividend?
Solution Preview
Correct answer: c. the amounts shown in the firm's capital accounts are redistributed.
A stock dividend is an assurance of shares of stock that reflect the current owner's share of accumulated earnings. Stock dividends are accounted for by transferring an amount equal to the fair value of the additional shares issued from undivided profits to a category of permanent capital (common stock or and surplus). The amount transferred or redistributed from undivided profits shall be not less than the par value of the transferred shares being issued. Stock dividends are subject to 12 USC 56, but not 12 USC 60.
This question is somewhat tricky, though, because it doesn't really specific from what vantage point the answers are coming from (i.e., the investor of the firm), so it is a process of elimination. Let's look at some definition ...
Purchase this Solution
Free BrainMass Quizzes
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.
Learning Lean
This quiz will help you understand the basic concepts of Lean.
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
Social Media: Pinterest
This quiz introduces basic concepts of Pinterest social media
Six Sigma for Process Improvement
A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.