Question

In the context of Current Account transactions of Balance of Payment, identify the incorrect statement from the following:

Options

• Export of goods and services are recorded as credit items.

• Import of goods and services are recorded as debit items.

• All transfer payments are recorded as debit items.

• All transfer receipts are recorded as debit items.

Answer 1

All transfer receipts are recorded as debit items.

Explanation:

In the Current Account of the Balance of Payments, transfer receipts (such as foreign remittances or aid received) are recorded as credit items, not debit items, because they bring foreign exchange into the country. Conversely, transfer payments (like foreign aid given) are recorded as debit items.