Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

2. Transaction Analysis

Journal Entries: Debits and Credits

Financial Accounting

2. Transaction Analysis

Journal Entries: Debits and Credits

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Multiple Choice

Which of the following transactions is recorded as a credit entry in a country's current account?

A domestic company exports goods to a foreign buyer.

A domestic resident imports services from abroad.

A domestic company pays interest to a foreign lender.

A resident purchases shares in a foreign company.

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Verified step by step guidance

Understand the concept of the current account: The current account is a component of a country's balance of payments that records transactions involving goods, services, income, and current transfers. A credit entry in the current account represents an inflow of money into the country.

Analyze the first option: 'A domestic company exports goods to a foreign buyer.' Exports are recorded as credit entries because they bring money into the country from foreign buyers.

Analyze the second option: 'A domestic resident imports services from abroad.' Imports are recorded as debit entries because they involve money leaving the country to pay foreign providers.

Analyze the third option: 'A domestic company pays interest to a foreign lender.' Paying interest to a foreign lender is recorded as a debit entry because it represents an outflow of money from the country.

Analyze the fourth option: 'A resident purchases shares in a foreign company.' This transaction is part of the financial account, not the current account, and would be recorded as a debit entry because it involves money leaving the country to purchase foreign assets.