What is the balance of payments and its two main accounts?

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The balance of payments is the record of all economic transactions between residents of a country and the rest of the world over a given period. It has two main parts: the current account, which covers trade in goods and services, income from investments, and unilateral transfers; and the capital and financial account, which tracks changes in ownership of assets between residents and nonresidents, such as foreign direct investment, portfolio investment, and loans. These two parts together show how a country finances its international activity and how its external position changes over time. The other options describe domestic fiscal or private-sector ledgers and don’t capture international transactions.