Question: Dividend received from investment abroad is recorded on the credit side of the capital account.
The correct answer is –
The statement is not entirely correct.
Dividend received from investment abroad is recorded in the current account of the balance of payments, not in the capital account. The capital account records capital transfers and the acquisition and disposal of non-produced, non-financial assets. Dividends received are a component of the current account, which records transactions related to the flow of goods, services, and income.
Therefore, the correct statement is: Dividend received from investment abroad is recorded on the credit side of the current account, not the capital account.