Balance of Trade

Current Account:

• Balance of trade/Net exports = (Exports-Imports)
• Exports= Credit/Asset
• Import= Debit/Liability

Net Foreign Import/Net Investment

• Income earned by the U.S owned foreign assets and Income paid to foreign held import assets

Capital/Financial Account

• The balance of capital ownership that includes the purchase of real and financial assets
• Direct Investment in the U.S. is a credit to the capital account 
• Direct Investment by U.S forms/individuals in a foreign country are debits to the capital account 
• Purchase of foreign financial assets represents a debit to the capital account 
• Purchase of domestic financial assets by foreigners represents a credit to the capital account 
• Current and capital account should zero each other out

Official Reserves

• Foreign currency holding of the U.S. balance of payments
• Official reserves should zero out balance of payments

Balance of Trade:
Good Export + Goods Imports

Balance on Goods and Services:
(goods exports + service exports) + (good imports + service imports)

Balance on Current Account:
Net Exports/Balance of Goods and Services + Net Investment + Transfers

Capital Account:
Foreign Purchase of U.S Assets + US Purchase of Foreign Assets

Account Balance:
Current + Capital

Official Reserves - Account Balance = 0

Current accounts: foreign purchase of markets + U.S. purchase of markets