The Effect of a Share Dividend Is to

question 212

Multiple Choice

The effect of a share dividend is to

• A) decrease total assets and equity.
• B) change the composition of equity.
• C) decrease total assets and total liabilities.
• D) increase the par value per share.

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Definitions:

Investment in Subsidiary

Refers to the holding of shares or interests by one company (the parent company) in another company (the subsidiary).

Goodwill

A non-material asset generated from purchasing another company at a cost exceeding the fair market value of its tangible net assets.

Paid-In-Capital Accounts

Accounts representing the funds contributed by shareholders over and above the nominal value of the shares; it's an equity item on the balance sheet.

Consolidating Journal Entry

A journal entry made in the process of combining the financial statements of several departments or subsidiaries into a single set of statements.