About: The balance of payments (BoP) records all economic transactions in goods, services, and assets of the country with the rest of the world for a specified time period, usually a year. In simple terms, it is a systematic accounting balance sheet of the country and includes both debit and credit transactions. BoP is used to monitor all international monetary transactions. All trades conducted by both the private and public sectors are accounted for in the BoP in order to determine how much money is going in and out of the country. There are two main accounts in the BoP – the current account and the capital account.
Objective: The basic purpose of BoP accounting is to know the strength and weaknesses of the economy. By analysing the BoP accounts of the previous year, you can know the overall gains and losses from international trade.
