balance of payments (BOP)

  

Definition

Set of accounts that record a country's international transactions, and which (because double entry bookkeeping is used) always balance out with no surplus or deficit shown on the overall basis. A surplus or deficit, however, can be shown in any of its three component accounts: (1) Current account, covers export and import of goods and services, (2) Capital account, covers investment inflows and outflows, and (3) Gold account, covers gold inflows and outflows. BOP accounting serves to highlight a country's competitive strengths and weaknesses, and helps in achieving balanced economic-growth.

Use this term in a sentence

  • If you want to figure out what your companies current finances are you will need to break down many things like your balance of payments.

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  • The balance of payments was double checked to ensure accurate reporting was taking place because we wanted to make a presentation to the board soon.

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  • If you want to know how much your company has spent through the year you will need to look through your balance of payments.

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