An American Buys a Japanese Car, Paying by Writing a Check

question 46

Multiple Choice

An American buys a Japanese car, paying by writing a check on an account with a bank in New York. How would this be accounted for in the balance of payments?

• A) current account, a Japanese good import
• B) current account, a U.S. good import
• C) financial account, a U.S. asset import
• D) financial account, a U.S. asset export
• E) a current account as a U.S. good import and a financial account, a U.S. asset export

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Definitions:

Raw Material

The basic substances or components that are processed and transformed into finished goods in manufacturing.

Fixed Overhead Volume Variance

The difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate, indicating how fixed costs are allocated over different levels of output.

Fixed Overhead Budget Variance

This term refers to the difference between the budgeted fixed overhead costs and the actual fixed overhead costs incurred.

Standard Fixed Manufacturing Overhead Rate

The predetermined rate used to apply fixed manufacturing overhead to products, based on an estimate of total fixed manufacturing costs and an allocation basis.