The document discusses the balance of payments (BOP) accounts of a country. It states that BOP is a systematic record of all economic transactions between residents of a country and foreign countries over a period of time, usually annually. It includes visible transactions like imports and exports of goods, as well as invisible transactions like services. The BOP has credit and debit sides and aims to balance out transactions that earn foreign currency against those that spend it. It contains current, capital and reserve accounts, and may include statistical discrepancies for errors and omissions. Disequilibria in BOP can lead to surpluses or deficits.

1. NAME: MILLENI PILLAI
STD: TYBCOM
DIV: A
SEAT NO : 3109

2.  Balance of payments (BOP) accounts are an accounting record of
all monetary transactions between a country and rest in world.
 These transactions include payment for the country’s exports and
imports of goods & services, financial capital and financial
transfers.
 A country has to deal with other countries in respect of 3 items:
 Visible items which includes all types of physical goods exported
and imported.
 Invisible items which includes all those services whose export and
import are not visible. e.g: transport services, medical services,
etc.
 Capital transfers which are concerned with capital receipts and
capital payments.

3. A balance of payments of a country is a systematic
record of all economic transactions between the
residents of reporting country and residents of
foreign countries during a given period of time.

4.  It is a systematic record of al economic
transactions between one country and the rest
of the world.
 It includes all transactions, visible as well as
invisible.
 It relates to a period of time. Generally, it is an
annual statement.
 It adopts a double entry booking system. It has
two sides: Credit side and Debit side.
 Receipts are recorded on credit side and
payments are recorded in debit side.

5.  If transactions earns foreign currency for the
nation, it is a credit an it is recorded as a plus
item.
 If transactions involves spending of foreign
currency, it is a debit and it is recorded as a
negative item.

7.  Current Account
 Capital Account
 Reserve Account
 Statistical Discrepancy(Errors and Omissions)

8.  BOP on current account refers to inclusion of
three balances – Merchandise balance, services
balance and Unilateral Transfer balance. In
other words it reflects the net flow of goods,
services and unilateral (gifts) transfers.
 The net value of balances of visible trade and of
invisible trade and of Unilateral transfers
defines the balance of current account.

9.  Capital Account records all international
transactions that involves all a resident of a
country concerned changing either his assets
with or his liabilities to a resident of a another
country.
 Transactions in capital account reflects a
change in a stock – either assets or liabilities.

10.  Three accounts: IMF, SDR,& Reserve and Monetary
Gold are collectively called as Reserve Account.
 The IMF Account contains purchases(credits) and re-
purchase(debits) from International Monetary Fund.
Special Drawing Rights (SDR) are a reserve asset
created by IMF and allocated from time to time to
member countries.
 It can be used to settle international payments between
monetary authorities of two different countries.

11.  The Double Entry Book keeping principles
states that for every credit, there is a
corresponding debit and therefore there should
be balance in BOP as well.
 In reality BOP may not balance because of
errors and omissions.
 Errors may be due to statistical discrepancies
and omissions may be due to certain
transactions may not get recorded.

12. Disequilibrium in Balance of payments means its
condition of surplus or deficit.
 A Surplus in the BOP occurs when total
receipts exceeds total payments. Thus,
BOP=CREDIT>DEBIT
 A Deficit in the BOP occurs when total
payments exceeds total payment receipts.
Thus,
BOP=CREDIT<DEBIT

13. 1. Increase in Imports:
 Import of essential goods and services
 Development programmes
 Population growth
2. Low or decline and Exports.
3. Cyclical Transmission.
4. International Capital Movement.
5. Structural changes.
6. Globalisation.

14. 1. Expenditure Reducing(adjusting)Policies.
2. Expenditure switching policies.
3. Direct measures:
 Tariffs
 Quotas
 Export promotion
 Import substitution
 Financial controls.

15.  The balance of payment is very important for a
country to try and keep equal.
 To low and you have a deficit to where you
borrow money and to high you are in surplus
which if taken lightly can actually lead to a
deficit.
 Imports and Exports keep a country running,
and keeping the balance keeps a country
Competitive in the Global Market.