A US Company Uses Pound Sterlings It Already Owned to Purchase

question 174

Multiple Choice

A U.S. company uses pound sterlings it already owned to purchase bonds issued by a company in Germany. Which of these countries has an increase in net capital outflow?

• A)Germany and the U.S.
• B)Germany but not the U.S.
• C)The U.S.but not Germany
• D)Neither Germany nor the U.S.

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Definitions:

Net Income

The total profit or loss of a company after all revenues, costs, and expenses have been accounted for, often referred to as the bottom line.

Operating Loss

A financial condition where a company's total operating expenses exceed its total revenues, indicating a negative operating profit.

Income Summary

An account in the ledger that aggregates all income and expense accounts to determine the net income or loss for a period.

Prepaid Rent

This is the amount paid for rent in advance of the rental period to which it relates, recorded as an asset on the balance sheet until the period to which it applies.