What is balance of payment? In simple terms, BOP is the transactions of the country with the rest of the world. The government of a country records each and every transaction which includes transactions carried out by public sector, private sector, and even individuals with the rest of the world. All these transactions are recorded on the basis of double entry principle, where both the debit and credit side of the transactions are included. BOP is classified into two accounts, current account and capital account. In short, current account records day to day transactions and single way transactions like imports and exports which are always short term in nature, whereas in capital account, long term transactions like loan provided to a foreign country (asset), investment made by a foreign country are recorded. This is just a gist for you to understand what balance of payment account is, we are not going in detail of current account, capital account, components under both the accoun...
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