If the United States Donates Footballs to Japan,how Is the Transaction

question 118

Multiple Choice

If the United States donates footballs to Japan,how is the transaction recorded on the U.S.balance of payments accounts?

• A)Decline in merchandise trade; increase in financial account
• B)Decline in financial account; increase in merchandise trade
• C)Decline in net unilateral transfers; increase in merchandise trade
• D)Decline in merchandise trade; increase in net unilateral transfers

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Definitions:

Expense Recognition

The accounting principle that expenses should be recorded in the period in which they are incurred, matching them with the revenues they help to generate.

Working Papers

Documents that auditors create to support an audit process, including detailed records and summaries of audit evidence.

Operating Cycle

The average period it takes for a business to convert its inventory into cash flows from sales, reflecting the time taken to sell inventory, collect receivables, and pay bills.

Income Summary

An account used in the closing process that summarizes the results of operations—revenues and expenses—over a specific period before transferring the net amount to retain earnings.