When the Sum of the Balance on Current Account and the Balance

question 70

Multiple Choice

When the sum of the balance on current account and the balance on capital and financial accounts are not zero, there is a:

• A) trade surplus in the balance of payments
• B) net error and omissions entry in the balance of payments
• C) balance of payments surplus
• D) trade deficit in the balance of payments

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Definitions:

Prepaid Expenses

Expenses paid in advance for goods or services, which are recognized as assets until they are consumed or the term of use expires.

Bonds Issued

Long-term securities issued by corporations or governments to raise capital, with a promise to pay back with interest.

Financing Activities

Transactions that result in changes in the size and composition of the equity capital or borrowings of a company.

Cash Flow

The net amount of cash and cash equivalents being transferred into and out of a business.