The U.S.government gives $1,000,000 to Somalia.In the U.S.balance of payments,the gift of funds is recorded as a ______ to the ________ account.and as a ______ to the ________ account.

Question

Quizplus · Accepted Answer

The gift of funds from the U.S. government to Somalia is considered a transfer payment, which is recorded as a debit to the current account (to represent the outflow of funds from the U.S.) and a credit to the financial account (to represent the inflow of funds to Somalia). Therefore, option D is the correct choice. Option A is incorrect because there is an offsetting transaction (a credit to the financial account) and option B and C have the debit and credit accounts reversed.

The USGovernment Gives $1,000,000 to Somalia