1. Which of the following statements is CORRECT?

a. The retained earnings account as shown on the balance sheet is a source of cash that can be used to pay dividends.

b. If a firm reports a loss on its income statement, then the retained earnings account as shown on the balance sheet will be negative.

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. Since depreciation is a source of funds, the more depreciation a company has, the larger its retained earning will be, other things held constant.