The Sum of the Balances of the Three Accounts of the Balance

question 176

Multiple Choice

The sum of the balances of the three accounts of the balance of payments (the current account, the capital account, and the official settlements account) is

• A) negative if there is a balance of trade deficit.
• B) equal to zero.
• C) positive if there is a balance of trade surplus.
• D) negative if there is a balance of trade surplus or positive if there is a balance of trade deficit.
• E) positive if there is a balance of trade surplus or negative if there is a balance of trade deficit.

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Definitions:

Asset Revaluation Surplus

The increase in value of an asset, reflected on a company's financial statements, after it has been revalued to its current market value.

General Reserve

Funds set aside by a company from its profits for general unspecified future risks or obligations.

Amortisation of Goodwill

The gradual write-off of the purchased goodwill of a company over time, reflected as a non-cash expense in the income statement.

Associate's Profit

The portion of profits attributable to a company's investment in an associate, typically accounted for using the equity method.