A Stock Dividend Results in an Increase in Paid-In Capital

question 37

True/False

A stock dividend results in an increase in paid-in capital in the accounts.

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Definitions:

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Common Stock Dividend Distributable

A liability account on the balance sheet representing a declaration of dividends by a company's board of directors that have not yet been paid out to shareholders.

Paid-in Capital

Funds received by a company in exchange for its stock, representing the equity capital contributed by shareholders.

Dividends Payable

A liability account on a company's balance sheet representing the amount of declared dividends that are to be paid out to shareholders.