Which of the following transactions is recorded as a credit entry in a country's current account?

• A. A domestic company exports goods to a foreign buyer.
• B. A domestic resident imports services from abroad.
• C. A domestic company pays interest to a foreign lender.
• D. A resident purchases shares in a foreign company.

Answer: (A)

Verified step by step guidance

1. Understand the concept of the current account: The current account is a component of a country's balance of payments that records transactions involving goods, services, income, and current transfers. A credit entry in the current account represents an inflow of money into the country.
2. Analyze the first option: 'A domestic company exports goods to a foreign buyer.' Exports are recorded as credit entries because they bring money into the country from foreign buyers.
3. Analyze the second option: 'A domestic resident imports services from abroad.' Imports are recorded as debit entries because they involve money leaving the country to pay foreign providers.
4. Analyze the third option: 'A domestic company pays interest to a foreign lender.' Paying interest to a foreign lender is recorded as a debit entry because it represents an outflow of money from the country.
5. Analyze the fourth option: 'A resident purchases shares in a foreign company.' This transaction is part of the financial account, not the current account, and would be recorded as a debit entry because it involves money leaving the country to purchase foreign assets.