Accounting: Tools for Business Decision Making, 5th Edition

Published by Wiley
ISBN 10: 1118128168
ISBN 13: 978-1-11812-816-9

Chapter 11 - Reporting and Analyzing Stockholders' Equity - Questions - Page 603: 17


It is correct that Stock dividend don't change anything.

Work Step by Step

However Companies issue the stock dividend for the following reasons: a) The stockholders are satisfied that they got the dividend without spending cash. b) Increase the marketability of shares by increasing the number of shares outstanding. c) To reinvest the earnings of the company permanently in the company. So this will never be available for cash dividend.
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