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 share capital by the same amount that they decrease retained earnings.
2. ________ decrease both total assets and total shareholders’ equity.
3. ________ decrease retained earnings.
4. ________ have no effect on a liability.