International Trade and Currency Markets
The Market Exchange Rates
Facilitating International Trade
Key elements for facilitating international trade:
- Relative prices for currency conversion
- A market for currency exchange
- A system for managing exchange rates
Transactions are conducted within the currency exchange market.
1. The Currency Market
Currencies are traded for various reasons:
- Profitability from buying and selling assets
- Speculation on exchange rate fluctuations
Supply and demand determine the equilibrium price, known as the exchange rate.
Read MoreInternational Economics and Balance of Payments
International Economy and Balance of Payments
International Trade
Different nations lack resources and capabilities, such as climate conditions, mineral resources, and technology. Modern commerce consists of exchanging goods, services, and capital between countries. This trade facilitates specialization.
Commercial Policy and Protectionism
Commercial policy involves different types of international trade intervention. Measures can include tariffs, import quotas, and export subsidies.
Forms of Commercial
Read MoreUnderstanding Cash Flow: Operating, Investing, and Financing
Cash flows from operating activities are primarily caused by activities that constitute the main source of company revenue, as well as other activities that cannot be classified as investment or financing activities. Operating cash flow is key because it demonstrates, from a financial standpoint, the company’s potential to meet its liquid fund needs through its core business operations.
Investing Activities
From a financial perspective, another group of activities is called investing activities. This
Read MoreFinancial Accounting Key Concepts and Formulas
Chapter 1: Financial Act – Key Concepts
Financial Act: External users making decisions.
Relevance: Predictive, confirmatory, material.
Faithful Representation: Completeness, neutrality, free of error.
Enhancing Qualitative Characteristics: Comparability, verifiability (can you trace balance), timeliness, understandability (clear and concise).
Assumptions: Economic entity (separates unit from owners), going concern (continuing operations), monetary unit (no inflation), periodicity (history of financial
Read MoreUnderstanding Accounts and Notes Receivable: Recognition, Valuation, and Disposal
Understanding Receivables: A Comprehensive Guide
This document outlines the key aspects of receivables, including accounts receivable (A/R) and notes receivable (N/R), focusing on recognition, valuation, and disposal.
Three Types of Receivables
- Accounts Receivable: Customer owes the company on account.
- Notes Receivable: Written promise with collection of interest.
- Other Receivables: Nontrade receivables, including interest loans, advances, and income taxes.
Key Issues with Accounts Receivable
- Recognizing
- Valuing
- Disposing
Recognizing
Read MoreCore Accounting Entries: Debits and Credits Illustrated
Recording Financial Transactions
Sales and Customer Receipts
- Sales Transaction:
Debit: Banks, Customers
Credit: Sales, VAT Payable - Document Signing (Notes Receivable):
Debit: Notes Receivable
(Implied Credit: Accounts Receivable/Sales) - Remaining Client Balances (Open Account):
Debit: Accounts Receivable - Total Sales Recognition:
Credit: Sales - Payment Received (Notes Receivable):
Debit: Bank/Cash
Credit: Notes Receivable - Payment Received (Client Balance):
Debit: Bank/Cash
Credit: Accounts Receivable - Sales Return:
Debit: