Practicing Success
Government of India repaid the loan of 2.5 billion US dollars to International Monetary Fund lately, where will this be recorded on the BoP account? |
It will be recorded on the credit side It will be recorded on the debit side It will either be recorded on the debit side or credit side The transaction will not be recorded |
It will be recorded on the debit side |
Whether a transaction is recorded on the debit side or credit side is determined on the basis of flow of foreign exchange. If due to any transaction, there is inflow of foreign exchange the transaction will be recorded on the credit side whereas, when there is outflow of the foreign exchange it will be recorded on the debit side. Here, the government had PAID the money thus an outflow of foreign exchange, which means the transaction will be recorded on the debit side of the account. |