If a US Firm Borrows from an American Bank and Then Converts

question 114

Multiple Choice

If a U.S. firm borrows from an American bank and then converts that money to euros to buy French wine, it will be accounted for as a(n) :

• A) subtraction from the U.S. capital account.
• B) addition to the U.S. current account.
• C) subtraction from the U.S. current account.
• D) addition to the U.S. capital account.

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Definitions:

Federal Regulations

Rules prescribed by federal agencies in order to implement the laws enacted by Congress.

Corporate Funds

Money or assets belonging to a corporation, managed by its officers or board for the company's purposes and objectives.

Takeover

The acquisition of one company by another.

Legal Contract

An agreement between parties that is enforceable by law, characterized by valid offer, acceptance, consideration, and mutual intent to be legally bound.