Question

If Tom purchases shoes from a japanese firm for 100$, and pays for them by borrowing 100$ on his visa credit card, the two account that are affected are:

A.) imports of goods with a minus(debit) and exports of finacnial assets a plus(credit)

B.) imports of goods with minus(debit) and exports of financial assets with a plus(credit).

C.) exports of good with a minus(debit) and imports of financial assets with a plus(credit)

D.) exports of goods with a plus(credit) and imports of financial assets with a minus(debit)

Answer 1

If Tom purchases shoes from a japanese firm for 100$, and pays for them by borrowing 100$ on his visa credit card, the two account that are affected are:

imports of goods with a minus(debit) and exports of financial assets a plus(credit)

Ans is A) or B) [ as both are same options ]

Explanation:

The item being imported into the US, is Japanese shoes. Since shoes is a merchandise good and is valued at $100, the import is recorded as a debit entry on the current account

The item exported in this case is the Japanese currency. As the payment made is in Yen currency, so here we export the financial assets ( as foreign currency is a financial asset ) . So this is recorded as a credit entry on the financial account.