When a Company Issues a Stock Dividend Which of the Following

question 85

Multiple Choice

When a company issues a stock dividend which of the following would be affected?

• A)Earnings per share.
• B)Total assets.
• C)Total liabilities.
• D)Total stockholder's equity.When a company issues a stock dividend, earnings per share decreases as the number of shares outstanding increases.There is no effect on total assets, total liabilities or total stockholders' equity.

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Definitions:

Return on Common Stockholders' Equity

A measure of financial performance that indicates how much profit a company generates with the money shareholders have invested, specifically for common shares.

Preferred Dividends

Dividends that are paid to preferred shareholders before any are distributed to common shareholders.

Earnings per Share

A measure of a company's profitability that indicates how much money shareholders would receive for each share owned, calculated by dividing net income by the number of outstanding shares.

Interest Expense

The cost incurred by an entity for borrowed funds, reflected as a charge in the income statement.