FAQs
Nominal Account is not a component of Balance of Payments.
What are the components of the balance of payments? ›
There are three main components of the BOP: the financial account, the capital account, and the current account. The combination of the first two should balance with the third, but that doesn't always happen.
Which of the following should not be included in the balance of payments account? ›
Bonus shares to equity shareholders are not included in the balance of payments account. The balance of payments (BoP) is a record of all economic transactions between residents of a country and the rest of the world over a specific period.
Which of the following is not recorded in the balance of payments? ›
Answer and Explanation:
The correct answer is option c, future accounts. The balance of payment does not include the predictable future account. It accounts for the transactions that a country and the global market can take into account. Options a, b and d are recorded in the balance of payment.
What is the list of balance of payments? ›
Components
- Trade – buying and selling of goods and services. Exports – a credit entry. Imports – a debit entry. Trade balance – the sum of Exports and Imports.
- Factor income – repayments and dividends from loans and investments. Factor earnings – a credit entry. Factor payments – a debit entry.
The four major components of a current account are goods, services, income, and current transfers.
What is balance of payments concepts? ›
The balance of payments (BOP) statistics describe the external stability of the economy in terms of both real and financial transactions and is part of the system of national accounts. The balance of payments is comprised of current, capital and financial accounts.
Which account is not included in balance sheet? ›
Off-balance sheet (OBS) assets are assets that don't appear on the balance sheet. OBS assets can be used to shelter financial statements from asset ownership and related debt. Common OBS assets include accounts receivable, leaseback agreements, and operating leases.
Which accounts are not balance? ›
Nominal Accounts are those accounts which are not balanced and transferred to trading and profit & loss account like purchases, manufacturing and administration expenses etc.
Which of the following types of accounts is not included in a balance sheet? ›
Answer and Explanation:
The correct answer is C) Sales. Sales is an income statement account that is temporary in nature. It is not included on the balance sheet. The balance sheet consists of assets, liabilities, and equity such as accounts receivable, accounts payable, and cash.
Components of BoP
The BoP consists of three main components—current account, capital account, and financial account. As mentioned earlier, the BoP should be zero. The current account must balance with the combined capital and financial accounts.
Which of the following statements about the balance of payments is correct? ›
The answer is c). The two accounts in the balance of payment system are the current account and capital account. The system must be balanced, i.e., any changes to one account must be accompanied by opposite changes of the same amount in the other account.
What is a balance of payments deficit? ›
In Macroeconomics, a balance of payments or balance of trade deficit is where the total imports (M) received by an economy exceed that of exports (X).
What is a capital account in a balance of payment? ›
The capital account of the balance of payments is a record of all transactions which alter the external assets and/or liabilities of a country.
What is the equilibrium in the balance of payment? ›
When the demand and supply of any foreign currency in a country in a given time period is equal, it is termed as 'Equilibrium position' in the balance of payment. While a disequilibrium means that the condition is either deficit or surplus.
What is equilibrium and disequilibrium in balance of payment? ›
When the demand and supply of any foreign currency in a country in a given time period is equal, it is termed as 'Equilibrium position' in the balance of payment. While a disequilibrium means that the condition is either deficit or surplus.
What are the errors and omissions in BOP? ›
The errors and omissions in the balance of payments are the net of all biases and missing data. The errors and omissions are calculated as the difference between the sum of the current and capital accounts and the financial account in a given period.
What is the capital account of the balance of payments? ›
The capital account, on a national level, represents the balance of payments for a country. The capital account keeps track of the net change in a nation's assets and liabilities during a year. The capital account's balance will inform economists whether the country is a net importer or net exporter of capital.
Is balance of payment always in equilibrium? ›
The balance of payment of a country must always be in equilibrium, a surplus on one account must be met with a deficit of equal magnitude on the other. Thus, the sum of the capital account and the current account must always be zero leading to a balance in the BOP in accounting sense.
