Which of the Following Is NOT True of Stock Dividends

question 116

Multiple Choice

Which of the following is NOT true of stock dividends?

• A) Stock dividends have no effect on assets or liabilities.
• B) Stock dividends increase dividends payable and reduce cash.
• C) Stock dividends affect only stockholder's equity accounts.
• D) Stock dividends have no effect on total stockholders' equity.

---

Definitions:

Liability

A legal obligation or responsibility for the outcome of actions or for the debts of another.

Term-Life Insurance

Life insurance that provides coverage for a specified term.

Specified Term

A fixed-duration period explicitly stated in a contract or agreement, after which the contract may expire if not renewed.

Incontestability Clause

A provision in a life insurance policy that prevents the insurer from disputing the policy's validity after it has been in force for a certain period, typically two years, except under circumstances such as fraud.