Question: What are the fundamental accounting issues associated with financing activities? Financing activities for corporations involve issuing debt and stock. These activities provide financial resources for

What are the fundamental accounting issues associated with financing activities?
Financing activities for corporations involve issuing debt and stock. These activities provide financial resources for the corporation to grow. Debt has to be repaid along with interest. Stockholders expect dividends or increases in stock prices resulting from profits earned by the corporation. How do managers decide how much of their financing should come from debt and how much from equity? What effect does the mix of debt and equity have for a corporation’s profits and risk?

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