Question

Payment for import of goods is recorded in the ______ side of the Current account of the Balance of Payments.

Options

• Debit

• Credit

• Both Debit and Credit.

• None of these

Answer 1

Payment for import of goods is recorded in the Debit side of the Current account of the Balance of Payments.

Explanation:

Export and import of goods account for a significant portion of foreign trade transactions (visible items). Payment for products imported is recorded on the negative side (debit items), whereas receipts from exports are recorded on the positive side (credit items) (credit items). The term "balance of trade" refers to the difference between observable exports and imports (or trade balance).