Interest paid on loan taken from IMF will be recorded in_____ side of _____ account.
(
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Shift 01/06/2023 8:30 AM - 11:30 AM
A
Credit, Current
B
Debit, Current
C
Credit, Capital
D
Debit, Capital
Correct Answer
Debit, Capital
Detailed Explanation
Correct Answer: (4) Debit, Capital
Explanation:
To solve this, we need to understand how Balance of Payments (BoP) works. BoP has two main accounts:
1. Current Account – includes:
Trade in goods (exports and imports)
Services (like tourism, IT services)
Income (interest, dividends)
Transfers (remittances, gifts)
2. Capital Account – includes:
Loans
Investments (FDI, portfolio investment)
Borrowings and repayments from/to foreign sources like IMF, World Bank, etc
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