1.

Concept of Balance of Payments.

Answer»

Balance of Payments: An accounting statement showing the value of imports and exports of tangible (visible) and intangible (invisible) goods during a year is called balance of payments.

Types of Balance of Payments:

1. Balanced: When the value of entries on credit side equals that on debit side, then balance of payment is said to be in balanced.

2. Unbalance: When the value of entries on credit side, is not equal to entries on the debit side, then balanced of payment is said to be in unbalanced.

  • Surplus In the balance of payments:
    If receipts are more than payments or value of entries on credit side is greater than the value of entries on debit side, then there is surplus in the balance of payments.
  • Deficit In the balance of payments:
    If receipts are less than payments or the value of entries on credit side is less than the value of entries on debit side, then there is deficit in the balance of payments.


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