Financial Accounts

What is the ' Financial Account'?

A financial account is a component of a country’s balance of payments that covers claims on or liabilities to nonresidents, specifically with regard to financial assets. Financial account components include direct investment, portfolio investment and reserve assets broken down by sector. When recorded in a country’s balance of payments, nonresidents' claims made on residents' financial assets are liabilities, while claims made against nonresidents by residents are assets.

The financial account is a tracking mechanism for shifts in international asset ownership, and it is composed of two subaccounts. The first subaccount includes domestic ownership of foreign assets, such as foreign bank deposits and securities in foreign companies. The second subaccount includes foreign ownership of domestic assets, such as the purchase of government bonds by foreign entities or loans provided to domestic banks by foreign institutions.

  • Accounting Certifications
  • Accrual Method Vs. Cash Method
  • Financial Accounting Reporting
  • Financial Accounting Vs. Managerial Accounting