If an American firm Citigroup earns profits while operating a business in London, then the value of the profit is entered as a _______ in the U.S. _______ account.

Question

Quizplus · Accepted Answer

The profit earned by Citigroup while operating a business in London is a positive value and it represents an inflow of funds from the UK to the US. Therefore, it should be entered as a positive value in the US current account, which records the transactions that involve the export and import of goods, services, and income. The other options are not applicable as they do not reflect the nature of the transaction. A negative financial account or negative capital account would represent an outflow of funds from the US, and a negative current account would represent a trade deficit.

If an American Firm Citigroup Earns Profits While Operating a Business