Manoj is making a dummy BOP account for his school project of economics. He got stuck at the entry, where, purchase of shares of a foreign firm was done by TATA industry. According to you, where will the transaction be recorded?
Answer & explanation
Correct answer: option 4
the correct answer is Option 4: Capital account
The purchase of shares in a foreign firm represents an outflow of capital from the domestic economy (India) to the foreign economy. Such transactions are categorized under the capital account, which records financial transactions including investments, loans, and other forms of capital movement.
