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.

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International 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

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Understanding 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

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Financial 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

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Understanding 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

  1. Recognizing
  2. Valuing
  3. Disposing

Recognizing

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Core 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:
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