How will a company's total current liabilities and total stockholders' equity be affected by the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.) Total Total Current Liabilities Stockholders’ Equity I. increase decrease II. increase no effect III. no effect decrease IV. no effect no effect \begin{array}{lll} & ext { Total } & ext { Total } \ & ext { Current Liabilities } & ext { Stockholders ' Equity } \ ext { I. } & ext { increase } & ext { decrease } \ ext { II. } & ext { increase } & ext { no effect }\ ext { III. } & ext { no effect } & ext { decrease } \ ext { IV. } & ext { no effect } & ext { no effect }\end{array} I. II. III. IV. Total Current Liabilities increase increase no effect no effect Total Stockholders’ Equity decrease no effect decrease no effect A) IB) IIC) IIID) IV

Question

How will a company's total current liabilities and total stockholders' equity be affected by the declaration of a stock dividend? (Assume the stock dividend is distributed at a later date.)     Total   Total   Current Liabilities   Stockholders’ Equity   I.   increase   decrease   II.   increase   no effect   III.   no effect   decrease   IV.   no effect   no effect  \begin{array}{lll} & 	ext { Total }  &  	ext { Total } \ & 	ext { Current Liabilities }  &  	ext { Stockholders '  Equity } \ 	ext { I. }  &  	ext { increase }  &  	ext { decrease } \	ext { II. }  &  	ext { increase }  &  	ext { no effect }\	ext { III. }  & 	ext { no effect } &  	ext { decrease } \	ext { IV. }  & 	ext { no effect } & 	ext { no effect }\end{array}  I.   II.   III.   IV.  ​  Total   Current Liabilities   increase   increase   no effect   no effect  ​  Total   Stockholders’ Equity   decrease   no effect   decrease   no effect  ​ A) IB) IIC) IIID) IV

Hillary Ochoa · Accepted Answer

Final Answer : D, Explanation :  The declaration of a stock dividend does not affect total current liabilities or total stockholders' equity. It merely reallocates amounts within the equity section from retained earnings to common stock and additional paid-in capital.

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