Final answer:
A stock dividend has no effect on total assets or total owners' equity. It redistributes the company's equity from retained earnings to common stock without changing the total value of the owners' equity.
Step-by-step explanation:
The question asks whether a stock dividend will reduce total assets, increase total owners' equity, have no effect on either, or have no effect on total assets. The correct answer is that a stock dividend will have no effect on total assets. When a company issues a stock dividend, it is distributing additional shares of its own stock to its current shareholders. These shares are distributed pro rata, so every shareholder receives additional shares based on the percentage of the company they already own. Fundamentally, a stock dividend reallocates a portion of the owners' equity from retained earnings to common stock. However, the total owners' equity does not change, as there is simply a shift within the equity section of the balance sheet.
Therefore, issuing a stock dividend has no effect on total assets or total owners' equity. It does not involve the outflow of cash or other assets, nor does it initially alter the overall value of the company. Instead, it increases the number of shares outstanding, potentially diluting the value of each individual share.