Consider the following statements and identify the right ones I A double entry system...........

Economic Affairs Balance of Payments

Consider the following statements and identify the right ones.

I A double entry system of record of all economic transactions between the residents of a country and rest of the world is called balance of trade

II All transactions related to goods, services or income are classified as capital account.

Which of the statements mentioned above is/are correct?

I only

II only

both

none

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Explanation:

1st statement is incorrect. The balance of trade (BOT) is the difference between a country's imports and its exports for a given time period. The balance of trade is the largest component of the country's balance of payments (BOP). Economists use the BOT as a statistical tool to help them understand the relative strength of a country's economy versus other countries' economies and the flow of trade between nations. The balance of trade is also referred to as the trade balance or the international trade balance.
2nd statement is incorrect. A capital account shows the net change in physical or financial asset ownership for a nation and, together with the current account, constitutes a nation's balance of payments. The capital account includes foreign direct investment (FDI), portfolio and other investments, plus changes in the reserve account.