Final answer:
The statement about financial leverage affecting the left-hand side of the balance sheet is false, as it primarily affects the liabilities on the right-hand side.
Step-by-step explanation:
The statement that financial leverage primarily affects the left-hand side of the balance sheet is false. Financial leverage pertains to the right-hand side of the balance sheet. Financial leverage is achieved through the use of borrowed funds with the goal to increase the return on equity. This process involves increasing the proportion of liabilities (specifically debt) relative to equity in a company's capital structure. The left-hand side of a balance sheet, which consists of assets, is not directly affected by financial leverage. Instead, an increase in liabilities (and potentially equity) on the right-hand side of the balance sheet is what categorizes financial leverage.