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Components of balance of payments account

Answer Text:
Components of balance of payments account:
The balance of payment account is made up of the following
i) Balance of payment on current account
This is the account that is used to determine the difference between the value of the country’s visible and invisible imports and exports. That is:
ii)
Balance of payment on current account = (visible export + invisible export) – (visible import + invisible import)
iii)In the account, the payments for the visible and invisible imports are debited while the receipts from visible and invisible exports are credited
ii) Balance of payment on capital account -This account shows the summary of the difference between the receipt and payments on the investment (capital). Receipts are income from investments in foreign countries while payments are income on local investments by foreigners paid out of the country.
iii )Official settlement account/Cash account/foreign exchange transaction account.
-this is an account that shows all foreign exchanges that has occur between country’s