How Does the Declaration and Distribution of a 10% Stock

question 137

Multiple Choice

How does the declaration and distribution of a 10% stock dividend affect stockholders' equity?

• A)The total amount of stockholders' equity will increase.
• B)The total amount of stockholders' equity will decrease.
• C)The balances of different accounts in stockholders' equity will change,but total stockholders' equity is unchanged.
• D)There is no change.

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Definitions:

Credit Policy

Rules a business adheres to for assessing a customer's eligibility for credit and the stipulations under which it is offered.

Opportunity Cost

The most valuable alternative that is given up if a particular investment is undertaken.

Incremental Cost

The additional cost incurred to produce one more unit of a product or service.

Accounts Receivables

The money owed to a company by its customers for goods or services that have been delivered or used but not yet paid for.