Which of the Following Statements Is CORRECT

question 4

Multiple Choice

Which of the following statements is CORRECT?

• A)Since depreciation is a source of funds, 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 shown 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.

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Definitions:

Soft Drinks

Carbonated, non-alcoholic beverage options often flavored with various sweeteners, fruits, or other flavorings.

Substitutes

Products or services that can be used in place of each other, where the increase in price of one leads to an increase in demand for the other.

Cross Elasticity Coefficient

A measure of how the quantity demanded of one good changes in response to a price change in another good.

Substitutability

The degree to which a product or service can be replaced with another as viewed by the consumer, affecting competition and market dynamics.