Question

State whether the following transactions will be recorded on debit or credit side of BOP.
(i) Loan from IMF to cover deficit of BOP.
(ii) Indian Government repays loan taken from IMF.
(iii) Purchase of shares of Infosys by a Japanese resident.
(iv) Export of Jute to Sri Lanka.
(v) Acquisition of a foreign company by Tata.
(vi) Purchase of toys from China.

Answer 1

Transactions relating to inflow of foreign exchange will be recorded on the credit side and outflows of foreign exchange on the debit side.
Debit Side: (ii), (v), (vi); Credit Side: (i), (iii), (iv).