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 & Financial a/c
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Debit entry in Capital & Financial a/c
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Detailed explanation-1: -The capital account is where all international capital transfers are recorded. In the financial account, international monetary flows related to investment in business, real estate, bonds, and stocks are documented.
Detailed explanation-2: -External Commercial Borrowing (ECB), Foreign Direct Investment, Foreign Portfolio Investment, etc form a part of the capital account.
Detailed explanation-3: -Any time an item (good, service, or asset) is exported from a country, the value of that item is recorded as a credit entry on the balance of payments. Any time an item is imported into a country, the value of that item is recorded as a debit entry on the balance of payments.
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.