If Nigeria imports vehicles from Japan the transaction will appear as a?

A. debit on Japan’s balance of payments
B. credit on Japan’s balance of payments
C. credit on Nigeria’s balance of trade
D. credit on Nigeria’s balance of payment

Correct Answer:

Option A – debit on Japan’s balance of payments

Explanation

In accounting, we debit the receiver and credit the giver. In this case, Japan is the receiver (receiving payments on the vehicle), while Nigeria is the giver, so Nigeria account would be credited.

The balance of payments (BOP) is a statement of all transactions made between entities in one country and the rest of the world over a defined period of time, such as a quarter or a year. Japan’s balance of payment will have a debit balance to the tone of the car value in monetary terms.