Which account records international capital transactions related to investments in business, real estate, bonds and stocks?

• A. Current account
• B. Financial account
• C. Capital account
• D. Balance of payments

Answer: (C)

Capital inflows and outflows tied to buying or selling financial assets across borders—such as investing in a foreign business, purchasing overseas real estate, or buying foreign bonds and stocks—are recorded in the financial account. This account specifically tracks changes in ownership of financial assets and liabilities between residents and non-residents. The capital account, by contrast, covers capital transfers and the acquisition or disposal of non-produced, non-financial assets, while the current account records trade in goods and services and income. The overall balance of payments sums these accounts. So these investments belong in the financial account.