Which of the following statements is CORRECT?
A) Since depreciation increases the firm's net cash provided by operating activities,the more depreciation a company has,the larger its retained earnings will be,other things held constant.
B) A firm can show a large amount of retained earnings on its balance sheet yet need to borrow cash to make required payments.
C) Common equity includes common stock and retained earnings,less accumulated depreciation.
D) The retained earnings account as reported on the balance sheet shows the amount of cash that is available for paying dividends.
E) If a firm reports a loss on its income statement,then the retained earnings account as shown on the balance sheet will be negative.

Question

Quizplus · Accepted Answer

Retained earnings are the portion of a company's profit that is reinvested in the business rather than distributed as dividends. A company can have a large amount of retained earnings on the balance sheet, but may still need to borrow cash to make required payments because retained earnings represent past profits that are currently held by the company, not necessarily cash on hand.

Which of the Following Statements Is CORRECT