Which of the Following Transactions Would Be Excluded in the Capital

question 29

Multiple Choice

Which of the following transactions would be excluded in the capital account?

• A) A Japanese citizen purchases a U.S. Treasury bill.
• B) A Japanese citizen purchases an office building in Manhattan.
• C) A U.S. citizen purchases a share of stock from a Japanese company.
• D) An American purchases a Toyota.

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Definitions:

Matching Principle

An accounting principle that requires companies to report expenses at the same time as the revenues they are related to, ensuring that financial statements accurately reflect business performance.

Recorded

Documented in official records or accounts.

Periodic Inventory System

A method of inventory valuation where the ending inventory and cost of goods sold are determined at the end of an accounting period.

Freight-In

Costs associated with transporting goods into a warehouse or to the buyer, typically included in the inventory cost under the accounting principle of absorption costing.