Smaller Firms Tend to Rely on Financial Intermediaries Instead of Financial

question 37

Multiple Choice

Smaller firms tend to rely on financial intermediaries instead of financial markets for external financing due to

• A) transactions costs.
• B) adverse selection.
• C) moral hazard.
• D) all of the above.

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Definitions:

Post. Ref. Column

Short for Posting Reference Column, it's used in journal entries to indicate where data is transferred in the ledger.

General Journal

A primary accounting record where financial transactions are initially recorded in chronological order.

Ledger

A comprehensive collection of a company's accounts, including assets, liabilities, equity, revenue, and expenses, used for tracking financial transactions.

Debit Side

The left-hand side of a ledger account, recording increases in assets or expenses and decreases in liabilities or equity.