CSEET · Economic and Business Environment · Global Environment
In the Balance of Payments of a country, which of the following transactions is recorded in the current account?
Export of software services is recorded in the current account, because the current account captures trade in goods and services, income and transfers. Share purchases by foreign investors, loan repayments and borrowings from the IMF are financial transactions and are recorded in the capital or financial account.
- AExport of software services by an Indian firm to a US clientCorrect
- BPurchase of shares of an Indian company by a foreign portfolio investor
- CRepayment of an external commercial borrowing by an Indian company
- DDrawing of foreign exchange from the IMF by the government
Explanation
The current account records trade in goods and services, primary income and secondary income (transfers). Export of services is a current account item. The other options are purchases or sales of financial assets or liabilities and therefore belong to the capital or financial account.
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