Debits and Credits
Like other accounts, the balance of payments records each transaction as either a plus or a minus, The general rule in balance-of-payments accounting is the following:
If a transaction earns foreign recurrence for the nation, is called a Reddit! and is recorded as a plus hem. If a transaction involves spending foreign currency, it is a debit and is recorded as a negative item. In general. export;, are credits and imports are debits. Exports earn foreign currency, ‘so they are credits. Imports require spending foreign currency, so the)’ are debits. How is the U.S. import of a Japanese camera recorded? Since we ultimately pay for it in Japanese yen. it is clearly a debit. How shall Vie treat interest and dividend income on investments received by Americans from abroad? Clearly. they are credit ‘items like exports because they provide us with foreign currencies.
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