Question

How is the balance maintained in the Balance of Payments (BoP) accounting?

a.

By eliminating transfer payments

b.

By treating transfer payments as trade in goods

c.

By balancing credit and debit entries

d.

By ignoring transfer payments

Answer: (c).By balancing credit and debit entries Explanation:The BoP account always balances because for every credit entry, there is a corresponding debit entry. Transfer payments are treated as trade in goodwill to maintain this balance.

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Q. How is the balance maintained in the Balance of Payments (BoP) accounting?

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