Compare and contrast the accounting for cash dividends and stock dividends.
Requirement
1. 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. __________ has(have) no effect on a liability.
c. __________ increase paid-in capital by the same amount that they decrease Retained earnings.
d. __________ decrease both total assets and total stockholders’ equity, resulting in a decrease in the size of the company.