Wilco Inc. declares a large stock dividend in the current reporting period. How will this transaction affect the accounting equation? Decreased Non-Cash Assets and Decrease Retained Earnings Decrease Cash and Decrease Retained Earnings Decrease Retained Earnings and Increase Contributed Capital Decrease Cash and Decrease Contributed Capital
Decrease Retained Earnings and Increase Contributed Capital
A large stock dividend is a distribution of additional shares to existing shareholders and does not involve any cash outflow. As a result, the accounting equation will be affected by a decrease in retained earnings and an increase in contributed capital. Therefore, the correct answer is "Decrease Retained Earnings and Increase Contributed Capital."
