ECONOMICS
BALANCE OF PAYMENTS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Credit entry in current a/c
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Debit entry in Current 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: -When an investor pays a company for shares of its stock, the typical journal entry is for the company to debit the cash account for the amount of cash received and to credit the contributed capital account.
Detailed explanation-2: -The balance in a capital account is usually a credit balance, though the amount of losses and draws can sometimes shift the balance into debit territory. It is usually only possible for the account to have a debit balance if an entity has received debt funding to offset the loss of capital.
Detailed explanation-3: -The capital account is a record of the inflows and outflows of capital that directly affect a nation’s foreign assets and liabilities. It is mainly concerned with the transactions which are a part of international trade. It is also a part of the balance of payments.
Detailed explanation-4: -Purchase Credit Journal Entry is the journal entry passed by the company in the purchase journal of the date when the company purchases any inventory from the third party on the terms of credit. The purchases account will be debited.