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

a. Decrease Retained Earnings.

b. Have no effect on a liability.

c. Increase contributed capital by the same amount that they decrease retained earnings.

d. Decrease both total assets and total shareholders’ equity, resulting in a decrease in the size of the company.