Which of the Following Statements Is CORRECT

question 26

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:

Coin Flip

A basic randomization method used to determine outcomes by flipping a coin.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.

52-Card Deck

A standard deck of playing cards used in many card games, consisting of four suits: hearts, diamonds, clubs, and spades, each with 13 ranks from Ace through King.

Draw

To produce a picture or diagram by making lines and marks on paper with a pencil, pen, etc., or within the context of games, a result in which opponents finish with equal scores.