In the ACCA exam, a common test site appears in the test paper every year. This proving ground is BOP. For new candidates who apply for the exam for the first time, many people will be unfamiliar with this test center. In this regard, Deep Space Network will give you a detailed explanation today.

What is BOP?

The balance of payments is an account for a country to record import and export trade and international trade, which is equivalent to an accounting book for a country to record international trade. More interestingly, the balance of payments also adopts double-entry bookkeeping.

Note: The double entry bookkeeping method simply means to reflect a transaction through one entry and one exit of two or more subjects.

Important matters:

When imports exceed exports, there is a trade deficit, which is called trade deficit.

When exports exceed imports, that is, trade surplus, we call it trade surplus.

So it involves the classification of transaction types. BOP-* * has three subjects, namely

1. Current account

This course is dedicated to recording import and export goods, services, investment income,

And current transmission.

Note: Current transfer, also known as unilateral transfer, refers to the free transfer from one party to another, such as foreign donations and remittances.

2. Capital account

The capital account has little use, mainly because some specific capital transfers, such as debt forgiveness and the transfer of immigrant assets, are unilateral asset transfers. Especially within a year, most countries have almost no such capital flow.

3. Financial accounts

The financial account mainly records two items:

1. Changes in the overseas net assets of China (China).

2. Changes in foreign net assets in China

To explain, the net change refers to the change in the difference between the sale and purchase of assets, which is different from the total change.

According to the recommendations of the International Monetary Fund, financial accounts mainly record

1. Direct investment

2. Securities investment

3. Other investments

4. Reserve assets

It doesn't matter if you don't understand the above. Specifically, it's like securities investment/foreign exchange assets/monetary gold.

Finally, back to this topic, because the balance of payments records the change of one year, generally speaking, both trade surplus and deficit appear in the current account.