An Indian real estate company receives rent from Microsoft company, a US based company. This transaction will be recorded on _ _ _ _ _ side of the _ _ _ _ _ _ _ account.
Answer & explanation
Correct answer: option 1
The correct answer is option (1) : Credit, Current
- In accounting, the term "current account" refers to the financial statement that records transactions with foreign entities, such as imports, exports, services (like rent), and income (like interest and dividends).
- When the Indian real estate company receives rent from Microsoft, it represents an inflow of foreign exchange (US dollars). This transaction will increase the credit balance in the current account, reflecting the receipt of funds from a foreign entity (Microsoft).