Since Stock Dividends Are Paid with Shares of Stock Instead

question 145

Essay

Since stock dividends are paid with shares of stock instead of cash, no reduction in Retained Earnings is recorded.

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Definitions:

Capital in Excess

Funds that exceed the par value of issued stock, often referred to as additional paid-in capital or share premium.

U.S.GAAP

United States Generally Accepted Accounting Principles, a collection of rules and guidelines designed to improve and standardize accounting practices.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired and put into use.

Balance Sheet

A financial statement that provides a snapshot of a company’s financial condition at a specific time, including assets, liabilities, and shareholders' equity.