Question

9. Indicate whether each of the following items represents a debit or a credit on the U.S. balance- of-payments: a. A U.S. importer purchases a shipload of French wine. b. A Japanese automobile firm builds an assembly plant in Kentucky. c. A British manufacturer exports machinery to Taiwan on a U.S. vessel. d. A U.S. college student spends a year studying in Switzerland. e. American charities donate food to people in drought plagued Africa. f. Japanese investors collect interest income on their holdings of U.S. government securities. g. A German resident sends money to her relatives in the United States. h. Lloyds of London sells an insurance policy to a U.S. business firm. i. A Swiss resident receives dividends on her IBM stock.

Answer 1

Answer

In the U.S Balance of payment, a debit represents a payment made to foreigners and credit represents receipt of payment from foreigners.

Transaction	Debit or Credit
A U.S. importer purchases a shipload of French wine.	Debit
A Japanese automobile firm builds an assembly plant in Kentucky.	Credit
A British manufacturer exports machinery to Taiwan on a U.S. vessel.	Credit
A U.S. college student spends a year studying in Switzerland.	Debit
American charities donate food to people in drought-plagued Africa.	Debit
Japanese investors collect interest income on their holdings of U.S. government securities.	Debit
A German resident sends money to her relatives in the United States.	Credit
Lloyds of London sells an insurance policy to a U.S. business firm.	Debit
A Swiss resident receives dividends on her IBM stock.	Debit