While a Cash Dividend Reduces Assets, a Stock Dividend Only

question 75

True/False

While a cash dividend reduces assets, a stock dividend only shuffles amounts between shareholders' equity accounts.

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Definitions:

Sales Volume

The quantity of products or services sold by a business within a specific time period.

Fixed Costs

Expenses that do not change with an increase or decrease in the amount of goods or services produced.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.

Contribution Margin

The amount of revenue from sales that exceeds variable costs, indicating how much contributes to covering fixed costs and generating profit.