Question

In the Balance of Payments, transactions involving bonds and equity shares are recorded under which of the following accounts?

• A. Trading Account
• B. Financial Account
• C. Current Account
• D. Errors and Omissions

Hint:

Bonds and equity shares are financial assets, so their transactions are recorded in the Financial Account of Balance of Payments.

Answer 1

The Correct Option is B

Concept:
Balance of Payments records all economic transactions between residents of a country and the rest of the world. It has different accounts such as: Current Account
Capital Account
Financial Account

Step 1: Understand bonds and equity shares.
Bonds and equity shares are financial assets. Transactions in these assets involve investment flows between countries.
Step 2: Identify where financial assets are recorded.
Transactions involving financial assets such as: bonds
equity shares
portfolio investment
are recorded in the Financial Account.
Step 3: Eliminate other options.
Current account records trade in goods and services, income and transfers. Trading account is not the correct Balance of Payments account here. Errors and omissions are used for statistical adjustment.
Step 4: Final conclusion.
Therefore, transactions involving bonds and equity shares are recorded under: \[ \boxed{\text{Financial Account}} \] Hence: \[ \boxed{\text{(B)}} \]