Table of Contents
- 1 What is official reserve account class 12?
- 2 For what purpose official reserve assets are used?
- 3 Why balance of payment is important?
- 4 How do you calculate official reserve balance?
- 5 What are the two main accounts of the balance of payment?
- 6 What are official revenue transactions?
- 7 What is reserve accounting?
- 8 What is reserve accrual?
What is official reserve account class 12?
Official reserve transactions refer to transactions by the central bank that cause changes in its official, reserves of foreign exchange. Such transactions take place when a country withdraws from its stock of foreign exchange reserves to finance deficit in its overall balance of payments (BOP).
What is official reserves in economics?
Foreign currencies held by a nation’s central bank, resulting from accumulations in the current account and the financial account in the nation’s balance of payments.
For what purpose official reserve assets are used?
Official Reserve Assets include foreign exchanges, gold, SDRs (special drawing rights), and reserves with the IMF. These are assets that can be readily converted and used for payments. Among these, foreign exchanges usually account for a chunk of the reserve assets.
What are official reserve assets and why are they important to countries?
Reserve assets include currencies, commodities, or other financial capital held by monetary authorities to finance trade imbalances, check the impact of foreign exchange fluctuations, and address other issues under the purview of the central bank. They can also be used to restore confidence in financial markets.
Why balance of payment is important?
The importance of the balance of payment can be calculated from the following points: It examines the transaction of all the exports and imports of goods and services for a given period. It helps the government to analyse the potential of a particular industry export growth and formulate policy to support that growth.
What are the official reserve transactions explain their importance in bop?
Transactions that are carried out by the monetary authority of a country which makes changes in official reserves is known as official reserve transaction or ORT. Transactions such as the purchase and sale of currency in the exchange market for other assets and foreign currencies.
How do you calculate official reserve balance?
Hence, the sum of the current account balance, capital account balance, and the official reserve account balance are always zero. BOP = Current Account Balance + Capital Account Balance – Official Reserve Account = 0.
What is meant by official reserve transaction discuss their importance in balance of payments?
Answer: Official reserve transactions are the transactions made by the Central Bank which cause changes in its official reserves of foreign exchange. This happens only when an economy withdraws from its stock of foreign exchange reserves to finance deficit in its overall BOP.
What are the two main accounts of the balance of payment?
The balance of payments divides transactions into two accounts: the current account and the capital account.
What is difference between BOT and BOP?
BOT is a statement which records a country’s imports and exports of goods with other countries in a period. Whereas BOP records all the economic transactions performed by that country within a period.
What are official revenue transactions?
Answer. The transactions carried by monetary authority of a country, which cause changes in official reserves, transactions (ORT). These transactions are carried through purchase or sale of currency in the exchange market for foreign currencies or other assets.
How official reserve transactions are helpful in maintaining balance in bop?
The reserves are drawn by selling foreign currencies in exchange market during deficits and foreign currencies are purchased during surplus to maintain an overall balance in the BOP. It helps to adjust the deficit and surplus in balance of paymentsHope this helps…
What is reserve accounting?
In finance, reserve accounting refers to how reserves are computed, utilized, and most importantly, accounted for. There are various kinds of accounts kept by a company or business, such as the cash account and expenditure account. Similarly, there is also a reserve account with its own ledger and balance sheet.
What do reserve funds mean?
Key Takeaways A reserve fund is savings or a liquid asset set aside to cover unexpected costs or future financial obligations. Many governments, financial institutions, and individuals regularly set aside funds into accounts that earn interest. Pensions are examples of reserve funds as money is invested on behalf of members and paid in the future. More
What is reserve accrual?
Accrual : may be revenue or expense , it is represent the unpaid revenue or expense which has accrued in last period provision : it is credit account create to face uncertainty conditions in certain account such as uncollecteable receviablereserve : it is credit account create to face emergency conditions such as general reserve.
What is allowance in accounting?
Dictionary of Real Estate Terms for: allowance. allowance. an accounting term used on a financial statement or in a budget providing for an expectation of something that may occur. Examples: allowance for vacancy and collection loss. allowance for depreciation. allowance for replacements.