Question

In the context of Balance of Payments Account, state whether the following statements are true or false. Give reasons for your answer.

(i) Profits received from investments abroad is recorded in Capital Account.

(ii) Import of machines is recorded in Current Account.

Answer 1

(i) False, it is recorder in current account as it neither affects foreign exchange assets nor foreign exchange liabilities.

(ii) True, all imports and exports of goods are recorded in trade account which is a part of current account, because it is simply import/export of a good.