A Citizen in a Developing Country with a Currency Policy

question 105

Multiple Choice

A citizen in a developing country with a currency policy of convertibility on the current account could engage in all of the following transactions except:

• A)purchase foreign currency in order to import a BMW.
• B)sell foreign currency resulting from the exports of manufactured t-shirts.
• C)purchase foreign currency in order to purchase a U.S. treasury bond.
• D)sell foreign currency resulting from the sale of a U.S. treasury bond.

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Definitions:

Closing Entries

journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts, thereby preparing the accounts for the next period.

Capital Account

A financial statement that shows the changes in a company's equity throughout an accounting period, including contributions from and distributions to owners.

Withdrawals Account

An account used to track money taken out of a business by its owner(s) for personal use.

Income Summary

An account used in closing process to collect all revenue and expense account balances before determining net income or loss.