What is a balance of payments?

These financial transactions are made by individuals, firms and government bodies to compare receipts and payments arising out of trade of goods and services . The balance of payments consists of two primary components: the current account, and the capital account.

What is the formula for calculating balance of payments?

The formula for calculating the balance of payments is current account + capital account + financial account + balancing item = 0. What Is BOP and Its Components? The BOP is all transactions between entities in one country and the rest of the world over some time.

What is a balance of payments (BOP)?

The balance of payments (BOP) is the method countries use to monitor all international monetary transactions in a specific period. The BOP is usually calculated every quarter and every calendar year. All trades conducted by both the private and public sectors are accounted for in the BOP to determine how much money is going in and out of a country.