Explanation:

The balance of payments (BoP) record the transactions in goods, services, and assets between residents of a country with the rest of the world for a specified time period typically a year. It represents a summation of country’s current demand and supply of the claims on foreign currencies and of foreign claims on its currency.

There are two main accounts in the BoP – the current account and the capital account.

• Current Account: The current account records exports and imports in goods, trade in services and transfer payments.
• Capital Account: The capital account records all international purchases and sales of assets such as money, stocks, bonds, etc. It includes foreign investments and loans.