Question

Options: Current Account Debit, Current Account Credit, Capital Account Debit, Capital Account Credit

1. Foreign freight and shipping services purchased by a Canadian exporter from a foreign transportation firm

2. Japan purchases more Canadian lumber products

3. Nova corporation of Canada sells a new stock issue to a Chinese investor

4. The purchase of insurance from Lloyds of London

5. The hotel bill of a Canadian tourist in Rome

6. Expenditures abroad by Canadian tourists

7. $15,000,000 sale of natural gas by PanCanadian to an American utility company

8. The import of a BMW automobile

Answer 1

Current account consists of exports and imports of goods, exports and imports of services, unilateral transfers and investment income.

Capital account consists of foreign investment and loans, banking and other forms of capital.

Expenditure of Canada is shown on the Debit side of Capital or Current Account.

Income of Canada is shown on the Credit side of Capital or Current Account.

1. Debit on the Canadian Current Account

2. Credit on the Canadian current account.

Purchase of goods and services are shown in current account.

3. Credit on the Canadian Capital Account

Purchase and sale of stocks are capital account items.

4. Credit on the Canadian Capital Account

Purchase of insurance is capital account item.

5. Debit on the Canadian Current Account

Tourism expenses are shown in current account.

6. Debit on the Canadian Current Account

Tourism expenditure are current account expenditure.

7. Credit on the Canadian Capital Account

Sale and purchase of securities come under Capital account.

8. Debit on the Canadian Current Account

Import of goods are shown in the current account.