An Indian real estate company receives rent from Microsoft company, a US based company. This transaction will be recorded on the ________ side of the ________ account.
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Credit, Current
The rent is income earned by an Indian company from a foreign company, and the money flows into India. A flow into the country is a credit item.
Rent is a factor income, the income from land and buildings. The current account records trade in goods and services and transfer payments, and services include factor income. The capital account records buying and selling of assets, and no asset changes hands here.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| – | – | – | 02-06 S3 | 06-08 S2 |
NCERT (2026-27): “6.1.1 Current Account Current Account is the record of trade in goods and services and transfer payments. Figure 6.1 illustrates the components of Current Account. Trade in goods includes exports and imports of goods. Trade in services includes factor income and non-factor income transactions. Transfer payments are the receipts which the residents of a country get for ‘free’, without having to provide any goods or services in return.… …Balance of Trade (BOT) is the difference between the value of exports and value of imports of goods of a country in a given period of time. Export of goods is entered as a credit item in BOT, whereas import of goods is entered as a debit item in BOT.… …Invisibles include services, transfers and flows of income that take place between different countries. Services trade includes both factor and non-factor income. Factor income includes net international earnings on factors of production (like labour, land and capital).…”
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