Each of the following decreases total stockholders' equity except stock dividend.
The ownership stake that shareholders have in a firm is reflected in its equity accounting. A company's retained earnings, which are its cumulative profits, as well as ordinary and preferred shares, capital contributions over par, and other items are considered to be equity. The par value, also known as the stated value, is often set at one dollar or less and indicates the lowest share market value.
Corporations use retained earnings to pay dividends. Selling ordinary or preferred shares to minority shareholders is a popular way for privately owned companies to obtain money. The difference between a company's assets and liabilities is known as shareholders' equity, or owners' equity. By paying out surplus funds to owners, cash dividends lower investors' equity. Stock dividends do not change the equity of stockholders' balance; instead, they transfer more shares to shareholders.
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