Accounting for Stock Dividends | Financial Accounting скачать в хорошем качестве

Accounting for Stock Dividends | Financial Accounting

In this video, we explain accounting stock dividends. Start your free trial: https://farhatlectures.com/ Stock Dividends A stock dividend is a distribution of additional shares to existing shareholders instead of cash. It does not change the total value of a shareholder’s investment but increases the number of shares they own. Key Features of Stock Dividends No Cash Payout – Investors receive additional shares rather than cash payments. Proportional Distribution – Shareholders get a percentage of their existing holdings as new shares. No Impact on Total Equity – The total value of equity remains unchanged, but shares outstanding increase. Common in Growth Companies – Companies that want to reinvest profits often issue stock dividends instead of cash dividends. Types of Stock Dividends Small Stock Dividend – Less than 20-25% of outstanding shares; recorded at market value. Large Stock Dividend – More than 25% of outstanding shares; recorded at par or stated value. Effects of Stock Dividends Increases Shares Outstanding – More shares are available in the market. Reduces Stock Price – Since more shares exist, the per-share price often decreases. Retained Earnings Decrease – The company transfers part of retained earnings to common stock and additional paid-in capital. Conclusion Stock dividends allow companies to reward shareholders without spending cash. While they do not immediately change an investor’s total wealth, they can lead to future gains if the company continues to grow. #accountingstudent #financialaccounting #onlinecourses