Question

I believe some of these are double booking but I am honestly so confused on how to tell if it is a debit or credit and what part is which.

Please point out the debit and credit items in the U.S. BOP in each of the following transactions :

(a) A U.S firm purchases a shipload of wine from France and pays for it by writing a check on a bank account they have at a French bank in Paris.

(b) A Japanese firm build a factory in Kentucky using funds from a U.S. bank account.

(c)A U.S. college student spends a year studying in Switzerland and pays for it from a scholarship she received from a Swiss organization. The scholarship funds are paid to this student through a deposit into her account at a Swiss bank.

(d) U.S. charities donate food to people in drought-plagued Africa.

Answer 1

Hi,
So lets start by making one thing very clear- what is a debit and what i s a credit on BOP
A credit and debit is nothing but two sides of a transaction and hence every transaction will result in a credit and a debit entry of equal value.
Credit is + and Debit is -

Transaction	Credit	Debit
A U.S firm purchases a shipload of wine from France and pays for it by writing a check on a bank account they have at a French bank in Paris.	- yes	yes -
A Japanese firm build a factory in Kentucky using funds from a U.S. bank account.	yes -	- yes
A U.S. college student spends a year studying in Switzerland and pays for it from a scholarship she received from a Swiss organization. The scholarship funds are paid to this student through a deposit into her account at a Swiss bank.	- yes	yes -
U.S. charities donate food to people in drought-plagued Africa.	-	yes