A U.S.retailer imports $1 million worth of goods from a Chinese tea company. A negative entry is made in the merchandise-import category of the current account for $1 million. At the same time,a positive entry of $1 million is made in the capital account for the transfer of funds to the Chinese company. This example illustrates what fundamental element of BOP accounting?

Question

Quizplus · Accepted Answer

This example illustrates the use of double-entry bookkeeping in BOP accounting, where there is a negative entry in the merchandise-import category of the current account and a positive entry in the capital account for the transfer of funds.

A USRetailer Imports $1 Million Worth of Goods from a Chinese