Question

Which of the following statements is CORRECT? 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. A firm can show a large amount of retained earnings on its balance sheet yet need to borrow cash to make required payments. Common equity includes common stock and retained earnings, less accumulated depreciation. The retained earnings account as reported on the balance sheet shows the amount of cash that is available for paying dividends. If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.

Answer 1

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

Step-by-step explanation: