Question

calculate the value of Net Value Added at Factor Cost (NVAFC):

S. No.	Particulars	Amount (In ₹ crore)
(i)	Operating Surplus	3,740
(ii)	Increase in unsold stock	600
(iii)	Sales	10,625
(iv)	Purchase of raw materials	2,625
(v)	Consumption of fixed capital	500
(vi)	Subsidies	400
(vii)	Indirect taxes	1,200

• A. Export of goods and services are recorded as credit items.
• B. Import of goods and services are recorded as debit items.
• C. All transfer payments are recorded as debit items.
• D. All transfer receipts are recorded as debit items.

Hint:

In BOP accounting: Exports and transfer receipts are credit items, while imports and transfer payments are debit items.

Answer 1

The Correct Option is D

In the Current Account of the Balance of Payment (BOP), export of goods and services are recorded as credit items because they bring foreign exchange into the country. Import of goods and services are recorded as debit items since they involve outflow of foreign exchange. Similarly, transfer payments like gifts, donations, and remittances sent abroad are debit items as they involve outflow of money. However, transfer receipts are credit items as they represent inflow of money from abroad. Hence, the incorrect statement is option (D).