Difference between capital and financial account?? (1 Viewer)

[sk8ie_boi]

So what is the difference between capital account and financial account?? .. I think I remember one is short term and one is long term..

Capital account: debt forgivenss by governments, capital gifts to and from abroad
Financial account: all types of investment into australia..

So can someone clear this for me??

 

[Haku]

ur right

Capital: basically capital transfers, all kinds
Financial: all the FDI and FPI + other investments

someone please add to the capital account,

and the difference between capital transfer and current transfers in the CA

 

[stargaze]

Capital Account:
1. Foreign Aid
2. Financial flows from people who are migrating (and bringing over their cash)
3. Purchase of non-financial assets (intellectual property etc)

 

[Haku]

how bout the current flow in the CA?

 

[stargaze]

Current 'flow'?

Well, let's break down the Current Account; theres:
1. Balances on Goods and Services - exports - imports
2. Net income - interest payments on borrowings, dividends from investment etc
3. Current TRANSFERS - financial resources such as payouts on insurance claims, pensions received by foreigns living here.

Current Transfers can be confused with Capital transfers, because they can both involve foreign aid. The foreign aid to help developing nations are in the CURRENT account; while the foreign aid to actualy build capital are in the CAPITAL account. (I don't really think this is necessary to know).

Keep in mind that the Current Transfers part of the Current Account is really, really small compared to the size of BOGS and Net income.

 

[DPW]

The Capital and Financial Account is always the opposite to the Current Account too. Remember that for any multiple choices that they throw in.

DANE

 

[Haku]

thanks dude.

 

[sk8ie_boi]

Current 'flow'?

Well, let's break down the Current Account; theres:
1. Balances on Goods and Services - exports - imports
2. Net income - interest payments on borrowings, dividends from investment etc
3. Current TRANSFERS - financial resources such as payouts on insurance claims, pensions received by foreigns living here.

Current Transfers can be confused with Capital transfers, because they can both involve foreign aid. The foreign aid to help developing nations are in the CURRENT account; while the foreign aid to actualy build capital are in the CAPITAL account. (I don't really think this is necessary to know).

Keep in mind that the Current Transfers part of the Current Account is really, really small compared to the size of BOGS and Net income.

wow .. our skool never went into dis much details .. haha .. I had no idea till u mentioned it

 

[waterbottle]

this is going to sound really dumb, but does financial debt go in the net income account? i can't remember where it goes.

 

[Jago]

Australia's debts to overseas is a debit in the income component in the CA

 

[waterbottle]

excellent, thank you!

 

[yabby]

Another feature is that Capital and Financial have "reversable" transactions
while Current account is obviously "non-reversable" ..
.... i think..*nerves are settling in*

 

[nick1048]

your right. You can't reverse good consumption lol it would be horrible to try ><. But you can always pay back a loan for instance.

 

[yabby]

your right. You can't reverse good consumption lol it would be horrible to try ><. But you can always pay back a loan for instance.

, but i think im gonna vomit now