MC Qu. 32 (LO11-5) We can identify financing activities... We can identify financing activities from additional information and changes in: Multiple Choice Stockholders’ equity accounts only. Long-term asset accounts. Current asset and current liability accounts. Long-term liability and stockholders’ equity accounts.
Question
MC Qu. 32 (LO11-5) We can identify financing activities... We can identify financing activities from additional information and changes in:
Multiple Choice
Stockholders’ equity accounts only.
Long-term asset accounts.
Current asset and current liability accounts.
Long-term liability and stockholders’ equity accounts.
Solution
The correct answer is:
Long-term liability and stockholders’ equity accounts.
Financing activities in a business involve changes in long-term liabilities, stockholders' equity (including issuing and buying back shares and paying out dividends), and short-term borrowings not included in operating activities. These are the ways a company finances its operations and overall capital expenditure, hence they are identified from changes in long-term liability and stockholders' equity accounts.
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