Question:medium
``Unilateral Transfers'' are recorded in which account of BOP?
``Unilateral Transfers'' are recorded in which account of BOP?
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Current Account = Visible Trade (Goods) + Invisible Trade (Services) + Unilateral Transfers. Capital Account = Foreign Investments + Loans + Banking Capital + Reserves.
Updated On: Mar 19, 2026
- Capital Account
- Current Account
- Errors and Omissions
- None of these
Show Solution
The Correct Option is B
Solution and Explanation
Step 1: Understanding the Concept:
Unilateral transfers are one-way transactions where no good or service is provided in return (e.g., gifts, donations, personal remittances).
Step 2: Detailed Explanation:
The Current Account of Balance of Payments (BOP) records:
1. Export and Import of Goods (Visible Trade).
2. Export and Import of Services (Invisible Trade).
3. Unilateral Transfers (One-way payments).
The Capital Account records transactions that lead to a change in the assets or liabilities of a country (e.g., FDI, External Borrowings).
Step 3: Final Answer:
Gifts and remittances do not create liabilities or change the asset status, so they are categorized under the Current Account.
Unilateral transfers are one-way transactions where no good or service is provided in return (e.g., gifts, donations, personal remittances).
Step 2: Detailed Explanation:
The Current Account of Balance of Payments (BOP) records:
1. Export and Import of Goods (Visible Trade).
2. Export and Import of Services (Invisible Trade).
3. Unilateral Transfers (One-way payments).
The Capital Account records transactions that lead to a change in the assets or liabilities of a country (e.g., FDI, External Borrowings).
Step 3: Final Answer:
Gifts and remittances do not create liabilities or change the asset status, so they are categorized under the Current Account.
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