1. Which of the following statements is CORRECT? a. The retained earnings accoun

Question

1. Which of the following statements is CORRECT?

a. The retained earnings account as shown on the balance sheet is a source of cash that can be used to pay dividends.

b. If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.

c. A firm can show a large amount of retained earnings on its balance sheet yet need to borrow cash to make required payments.

d. Since depreciation is a source of funds, the more depreciation a company has, the larger its retained earning will be, other things held constant.

Explanation / Answer

d

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