Question

Which of the following transactions in the balance of payments is recorded as a credit entry in a nation’s capital and financial account?

Responses

A) The sale of common stock to foreign households

B) Imports of computers used by domestic businesses

C) The interest earned by the nation on foreign financial assets

D) The nation’s purchases of consumer goods from foreign firms

E) The nation’s purchases of accounting services from foreign firms

Answer 1

Answer: A) The sale of common stock to foreign households

Step-by-step explanation:

When a nation sells common stock (equity) to foreign households, it results in an inflow of funds into the nation. This is recorded as a credit entry in the capital and financial account because it represents a positive financial transaction for the nation.