What Is the Economic Difference Between a Stock Dividend and a Stock

question 130

Multiple Choice

What is the economic difference between a stock dividend and a stock split?

• A) Stock splits create greater economic benefits to shareholders than stock dividends.
• B) Stock splits increase EPS more than stock dividends.
• C) There is no economic difference between a stock dividend and a stock split.
• D) Stock dividends create greater economic benefits to shareholders than stock splits.

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Definitions:

Total Revenues

The total amount of income generated by a business from its sales of goods or services before any expenses are subtracted.

Capital Account

An account showing the net worth of a business at a specific point, accounting for assets minus liabilities.

Statement of Owner's Equity

A financial document that summarizes the changes in the equity of a company over a period, including investments, withdrawals, and the net income or loss.

Income Statement

A financial report summarizing the revenues, costs, and expenses incurred during a specific period, typically a fiscal quarter or year.