Question

a) The balance of payments account of a country is constructed on the principle of double entry book-keeping
b) In balance of payment accounting, debits are shown on the left side and credits on the right side of the balance sheet
Of these :

• A. Both (a) and (b) are true
• B. Both (a) and (b) are false
• C. (a) is true, but (b) is false
• D. (a) is false, but (b) is true

Answer 1

Answer: (C)

(a) is true, but (b) is false

Balance of payment is the summary of all transactions that a domestic country does with other countries in a given period of time. It is constructed on the principle of double bookkeeping as all the payments are debited on the right-sided of the table for all the incomes that are credited on the left side of the table.

Hence, option (C) is the correct answer.