Comparing cash and stock dividends (Learning Objectives 4 & 5)

10–15 min.

Compare and contrast the accounting for cash dividends and stock dividends. In the space provided, insert either “Cash dividends,” “Stock dividends,” or “Both” to complete each of the following statements:

1. __________ increase paid-in capital by the same amount that they decrease retained earnings.

2. __________ decrease both total assets and total stockholders’ equity.

3. __________ decrease retained earnings.

4. __________ have no effect on a liability.

AppendixLO1