Which of the Following Statements Is CORRECT

question 35

Multiple Choice

Which of the following statements is CORRECT?

• A) If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.
• B) Since depreciation is a source of funds, the more depreciation a company has, the larger its retained earnings will be, other things held constant.
• 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) Common equity includes common stock and retained earnings, less accumulated depreciation.
• E) The retained earnings account as shown on the balance sheet shows the amount of cash that is available for paying dividends.

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Definitions:

Location

Refers broadly to a position or point in physical space or within a mathematical, conceptual, or statistical framework.

Qualitative

Concerning, measuring, or described by the quality of something rather than its quantity.

Mean

A measure of central tendency that represents the average value of a dataset, obtained by dividing the sum of all the values by the number of values.

Median

The middle value in a data set, which divides it into two equal halves, or the value that occurs at the 50th percentile.