💰 CPA Exam Prep

Stock dividends result in:

A Cash outflow
B Reclassification within equity from retained earnings to common stock and APIC
C Liability increase
D Revenue recognition

✓ Correct Answer: Option B

Stock dividends transfer retained earnings to paid-in capital. No cash, no total equity change—just reclassification.

💡 Why is B) the correct answer?

The correct answer to the question "Stock dividends result in:" is Option B: Reclassification within equity from retained earnings to common stock and APIC.

The other options — A) Cash outflow, C) Liability increase, D) Revenue recognition — are incorrect for this CPA Exam Prep question. As explained above: Stock dividends transfer retained earnings to paid-in capital. No cash, no total equity change—just reclassification.

📚 About This CPA Exam Prep Practice Question

This 2-level CPA Exam Prep question from the Financial Accounting (FAR) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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