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

Multiple Choice

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?

A) Identifying what is/is not an international economic activity
B) Understanding the flow of goods
C) Understanding the flow of services
D) Presenting tangible and intangible assets
E) Use of double-entry bookkeeping