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Stock Dividends definitions

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  • Stock Dividend
    Distribution of additional shares to shareholders, reallocating equity from retained earnings to common stock and APIC without affecting total equity.
  • Retained Earnings
    Equity account reduced by the value of stock dividends, representing accumulated profits not distributed as cash.
  • Common Stock
    Equity account credited for the par value of new shares issued in a stock dividend, reflecting ownership in the company.
  • Additional Paid-In Capital
    Equity account credited for the excess of stock dividend value over par, representing shareholder contributions above par value.
  • Par Value
    Nominal value assigned to each share, used to allocate part of the stock dividend to the common stock account.
  • Market Price
    Current trading value of a share, used to calculate the total dollar amount of a stock dividend.
  • Outstanding Shares
    Total shares currently held by shareholders, used as the base for calculating stock dividend percentages.
  • Small Stock Dividend
    Stock dividend representing less than 20-25% of outstanding shares, accounted for at market value.
  • Equity
    Section of the balance sheet affected by stock dividends, including retained earnings, common stock, and APIC.
  • Journal Entry
    Accounting record showing the reduction of retained earnings and the increase in common stock and APIC for a stock dividend.
  • Percentage Declaration
    Proportion of outstanding shares specified by the company to determine the size of a stock dividend.
  • Redistribution
    Reallocation of amounts within equity accounts when a stock dividend is issued, leaving total equity unchanged.
  • Dividend Amount
    Total value of additional shares distributed, calculated by multiplying new shares by market price.
  • Shareholder
    Individual or entity receiving additional shares through a stock dividend, maintaining proportional ownership.
  • Balance Sheet
    Financial statement where equity accounts are adjusted to reflect the effects of a stock dividend.