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Explain How Each of the Following Scenarios Will Affect the Current

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Essay

Explain how each of the following scenarios will affect the current account, capital account, and official reserve accounts of each country.
A) Walmart buys toys from a Chinese toymaker, and the toymaker uses the proceeds to purchases shares of GE's stock in the United States.
B) Toyota exports cars to Malaysia and deposits the sales revenue in a Japanese bank.
C) An American tourist takes a vacation at a resort hotel in Italy, and the hotel uses the revenue to purchase wines from California.


Definitions:

Straight-Line Method

An accounting method of depreciation where a fixed amount is charged annually over the useful life of the asset.

Net Liability

Net liability refers to the total liabilities of an entity minus its assets, indicating a financial position where obligations exceed resources.

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