Stock dividends may be discontinued or reduced at any time.

Stock dividends may be discontinued or reduced at any time.

• A. True
• B. False
• C. Depends on the company's preference
• D. Only under special circumstances

Answer: (A)

Stock dividends are not guaranteed payments; they’re distributions the board can authorize or withhold. Since the board decides whether and how much to pay or issue, a stock dividend can be discontinued or reduced whenever management needs to conserve resources or adjust capital structure. This discretion applies unless there are specific contractual obligations (such as certain preferred-dividend arrangements) that mandate payments, but for common stock stock dividends themselves are not binding obligations. So the statement is true: they may be discontinued or reduced at any time.

Stock dividends are not guaranteed payments; they’re distributions the board can authorize or withhold. Since the board decides whether and how much to pay or issue, a stock dividend can be discontinued or reduced whenever management needs to conserve resources or adjust capital structure. This discretion applies unless there are specific contractual obligations (such as certain preferred-dividend arrangements) that mandate payments, but for common stock stock dividends themselves are not binding obligations. So the statement is true: they may be discontinued or reduced at any time.