Balance of Payment (BOP)

Balance of Payment (BOP) - Concept & Definition

Most of exports and imports involve finance i.e. receipts and payments in money. An account of all receipts and payments is termed as Balance of Payments (BOP).

According to Kindle berger, "The balance of payments of a country is a systematic record of all economic transactions between the residents of the reporting country and residents of foreign countries during a given period of time".

The balance of payment record is maintained in a standard double-entry book-keeping method. International transactions enter in to the record as credit or debit. The payments received from foreign countries enter as credit and payments made to other countries as debit.

Balance of Payment is a record pertaining to a period of time; usually it is all annual statement. All the transactions entering the balance of payments can be grouped under three broad accounts; (1) Current Account, (2) Capital Account, and (3) Official International Reserve Account. However, it can be vertically divided into many categories as per the requirement.

Structure of Balance of Payment (BOP) ↓

1. Trade Account Balance

2. Current Account Balance

3. Capital Account Balance

4. Foreign Exchange Reserves

5. Errors and Omission

for details visit- http://www.mbachannel.blogspot.in/2014/05/balance-of-payment-bop.html

Distributed by Blogger Widgets