How Does the Declaration and Distribution of a 15% Stock

question 135

Multiple Choice

How does the declaration and distribution of a 15% stock dividend affect stockholders' equity?

• A)The total amount of stockholders' equity will increase.
• B)The total amount of stockholders' equity will decrease.
• C)The balances of different accounts in stockholders' equity will change,but total stockholders' equity is unchanged.
• D)There is no change.

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Definitions:

Trustee

An individual or company responsible for managing and overseeing assets or property on behalf of another party.

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A provision of the bankruptcy code that allows individuals and businesses to discharge or eliminate most of their debts through the liquidation of assets.

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Assets belonging to a debtor that may be used to pay off creditors.

Preferential Payment

A payment made by an insolvent debtor that gives preferential treatment to one creditor over another.