When U.S. Residents Purchase Foreign Assets

question 179

Multiple Choice

When U.S. residents purchase foreign assets,

• A) there is an outflow of funds from abroad and this is recorded as a negative item in the current account.
• B) there is an outflow of funds from the U.S. and this is recorded as a negative item in the capital account.
• C) there is an outflow of funds from abroad and this is recorded as a positive item in the current account.
• D) there is an outflow of funds from abroad and this is recorded as a positive item in the capital account.

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Definitions:

Overhead Applied

The allocation of indirect costs to produced goods or services, based on a predetermined rate or method.

Underapplied Overhead

This refers to the situation where the allocated manufacturing overhead cost is less than the actual overhead cost incurred.

Cost of Goods Sold

The immediate expenses linked to the manufacture of goods a company sells, which covers both materials and workforce.

Material

Substances or components that are used in the production or manufacturing of goods.