Question

Identify the incorrect statement with reference to Balance of Payments.

Options

• Current account records Exports and Imports transactions of a nation.

• Export of machinery is recorded in capital account.

• Transfer of funds to the relatives abroad, entered on debit side of current account.

• Current account records all such transactions which do not impact asset or liability status of a country.

Answer 1

Export of machinery is recorded in capital account.

Explanation:

Since machinery is a good and imports and exports of goods are only reported in the current account, exports of machinery are recorded in the current account rather than the capital account.