Every International Transaction Automatically Enters the Balance of Payments

question 64

Multiple Choice

Every international transaction automatically enters the balance of payments

• A) once either as a credit or as a debit.
• B) twice, once as a credit and once as a debit.
• C) once as a credit.
• D) twice, both times as debit.
• E) three times, once as a credit, once as a debit, and once as an exchange.

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Definitions:

Interest

The cost of borrowing money or the return on investment for savings and investments, typically expressed as an annual percentage rate.

Liquidity Ratios

Financial metrics used to assess a company's ability to meet its short-term debt obligations, by comparing current assets to current liabilities.

Debt-Paying Ability

A financial metric used to gauge a firm's capacity to settle its obligations, often assessed through ratios such as the debt to equity or debt service coverage ratios.

Operating Cycle

The duration it takes for a company to buy inventory, sell that inventory, and collect cash from the sale, representing the time it takes to convert resources into cash flows.