Practicing Success
Sale of assets like sale of share of an Indian Company to a foreigner customer is a _ _ _ _ _ _ _ _ _ item on capital account. |
Visible Debit Current Credit |
Credit |
The correct answer is option (4) : Credit Capital Account records all international transactions of assets. An asset is any one of the forms in which wealth can be held, for example: money, stocks, bonds, Government debt, etc. Purchase of assets is a debit item on the capital account. If an Indian buys a UK Car Company, it enters capital account transactions as a debit item (as foreign exchange is flowing out of India). On the other hand, sale of assets like sale of share of an Indian company to a Chinese customer is a credit item on the capital account. |