Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

12. Stockholders' Equity

Stock Dividends

Financial Accounting

12. Stockholders' Equity

Stock Dividends

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Multiple Choice

Which of the following transactions is classified as a stock dividend?

A company repurchases its own shares from the open market.

A company issues additional shares to existing shareholders in proportion to their current holdings, with no cash exchanged.

A company pays cash to shareholders based on the number of shares they own.

A company issues new shares to raise capital from the public.

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Verified step by step guidance

Step 1: Understand the concept of a stock dividend. A stock dividend occurs when a company distributes additional shares to its existing shareholders in proportion to their current holdings, without any cash exchange. This is different from cash dividends or other forms of equity transactions.

Step 2: Analyze the first option: 'A company repurchases its own shares from the open market.' This is classified as a stock buyback or treasury stock transaction, not a stock dividend.

Step 3: Analyze the second option: 'A company issues additional shares to existing shareholders in proportion to their current holdings, with no cash exchanged.' This matches the definition of a stock dividend, as it involves issuing shares to current shareholders without cash exchange.

Step 4: Analyze the third option: 'A company pays cash to shareholders based on the number of shares they own.' This is classified as a cash dividend, not a stock dividend.

Step 5: Analyze the fourth option: 'A company issues new shares to raise capital from the public.' This is classified as a public offering or equity financing, not a stock dividend.