Which Balance Sheet Accounts Are Most Affected by Financing Activities

question 8

Multiple Choice

Which balance sheet accounts are most affected by financing activities?

• A)Current assets
• B)Current liabilities
• C)Long-term assets
• D)Long-term liabilities and stockholders' equity

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Definitions:

Subsidiary Ledger

A detailed ledger that contains the individual accounts supporting a specific general ledger summary account.

Sales Returns and Allowances

Accounts that reduce total sales revenues on the income statement due to returned or damaged goods, or price allowances granted to customers.

Contra-Revenue Account

An account in the general ledger that reduces the total gross revenues reported by the business, including returns, allowances, and discounts.

Sales Discounts

Reductions in the price of goods or services offered to customers to encourage prompt payment or as part of a sales promotion.