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Balance of payments defined. What is the balance of payments?

Balance of payments defined. What is the balance of payments?

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Answer #1
The balance of payments [called BOP] is a statement
that summarizes the transactions that have been
made by the entities of one country with other
entities over the rest of the world over a specific
period of time.
The BOP is usually divided into a current account
section and capital account section.
The current account section summarizes the nation's
net position on account of trade in goods and services,
net earnings on cross broder investments and also
net transfers.
The capital account comprises the nations and imports
and exports on capital account. It also includes
foreign aid.
But for exchange rate discrepancies and differences
in accounting practices, the sum of all transactions
should be equal to zero.
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