If an American receives dividends from the shares of stock she or he owns in Toyota,Inc.,a Japanese firm,the transaction would be recorded on the U.S.balance of payments as a:
A) Capital account debit
B) Capital account credit
C) Current account debit
D) Current account credit

Question

Quizplus · Accepted Answer

Dividends are considered a form of income, which falls under the current account in the balance of payments. As the American is receiving income from a foreign source, it would be recorded as a current account credit. The capital account records transactions related to changes in ownership of assets, such as foreign direct investment or sales/purchases of securities.

If an American Receives Dividends from the Shares of Stock