For an upcoming sightseeing visit to India, a U.S. resident recently purchased a hundred thousand Indian rupees. His action created a ______.

Explanation: This is a point of convention where much confusion exists. Before you answer this question, you should remember two things:
1. In international finance, a country's reserve of foreign currency and foreign-produced goods is treated as an asset.
2. In accounting, by convention, increases in assets are recorded as "debit" entries and reductions are treated as "credit" entries.

In the above example, there is an inflow of Indian rupees and the transaction is hence recorded as a debit to the U.S. BOP account.