ECONOMICS
BALANCE OF PAYMENTS
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Credit entry in Current a/c (Invisible trade a/c)
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A debit entry in Current a/c (Visible trade a/c)
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Credit entry in Capital a/c
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Debit entry in Capital a/c
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Detailed explanation-1: -The Balance of Payments is a record of transactions between individuals or entities of one country with the rest of the world, within an accounting year. It helps governments examine imports and exports of goods and services to ascertain the state of their economy.
Detailed explanation-2: -In economics, a country’s current account records the value of exports and imports of both goods and services and international transfers of capital. It is one of the two components of its balance of payments, the other being the capital account (also known as the financial account).
Detailed explanation-3: -Trading in goods between countries is referred to as visible items, and import/export of services (banking, information technology etc.) are referred to as invisible items.
Detailed explanation-4: -The balance of payments is a double entry accounting statement based on rules of debit and credit similar to those of business accounting. For instance, exports (like the sales of a business) are credits, and imports (like the purchases of a business) are debits.