What is Unbalanced Balance of Payments? State its types.

1.	What is Unbalanced Balance of Payments? State its types.
Answer» Unbalanced Balance of Payment: When the entries on the credit side is not equal to entries on the debit side, Balance of Payments is said to be unbalanced. An unbalanced Balance of Payments can be further classified as follows: Deficit Balance of Payments: In the statement of Balance of Payments, if payments are more than receipts i.e. the value of credit side entries is lesser than the values of debit side entries, then there is a deficit in the Balance of Payments. Surplus Balance of Payments: In the statement of Balance of Payments, if receipts are more than payments i.e. the value of credit side entries is greater than the value of debit side entries, then there is a surplus in the Balance of Payments. According to the double entry book keeping system, a balance of payments always balances. However, in reality there can be a deficit or a surplus in the balance of payments.

Answer»

Unbalanced Balance of Payment:

When the entries on the credit side is not equal to entries on the debit side, Balance of Payments is said to be unbalanced.

An unbalanced Balance of Payments can be further classified as follows:

Deficit Balance of Payments:
In the statement of Balance of Payments, if payments are more than receipts i.e. the value of credit side entries is lesser than the values of debit side entries, then there is a deficit in the Balance of Payments.
Surplus Balance of Payments:
- In the statement of Balance of Payments, if receipts are more than payments i.e. the value of credit side entries is greater than the value of debit side entries, then there is a surplus in the Balance of Payments.
- According to the double entry book keeping system, a balance of payments always balances. However, in reality there can be a deficit or a surplus in the balance of payments.

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