Final answer:
The process of moving facts and figures from the original book of entry to ledger accounts is known as posting, and it's a crucial step in maintaining accurate financial records in business.
To calculate the current account balance, one subtracts income payments under Imports from the money under Exports, adjusts for unilateral transfers, and sums up the columns to obtain the balance.
Step-by-step explanation:
The process of transferring the essential facts and figures from the book of original entry to the ledger accounts is known as posting. This is a fundamental concept in accounting and involves systematically recording transactions in the ledger, which is the central location where all financial transactions of a business are compiled into accounts.
- Subtract the income payments flowing out of the country (under Imports) from the money coming back to the United States (under Exports) and note this amount under the Balance column.
- Enter unilateral transfers as a negative amount under the Balance column.
- The merchandise trade balance, which is the difference between exports of goods and imports of goods, is the first number under Balance.
- Finally, sum up the columns for Exports, Imports, and Balance to determine the current account balance.
Understanding the current account balance is critical in grasping the financial health of a country as it reflects the total transactions including goods, services, and income payments.