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2.6. Conceptually, an economic transaction has two sides: something of economic value is provided and something of equal value is received. The double-entry recording system in the balance of payments reflects this. When an economic value is provided (e.g. a shipment of wheat) a credit entry is made, and when an economic value is received (e.g. a payment for the wheat) a debit entry is made. For example, when an exporter sells (provides) goods to a non-resident, the exporter may receive cash (a financial asset) or another type of financial asset (e.g. a trade credit claim) in return. The export is represented by a credit entry and the financial asset acquired is represented by an offset debit entry. An understanding of the double-entry recording system is necessary for a complete understanding of balance of payments statistics.
2.8. The sign convention used in presenting balance of payments statistics is to give no sign (an implied positive sign) to credit entries and a minus sign to debit entries. Similarly, balances or items which are net credits have no sign, while balances or items which are net debits have a negative sign. This is illustrated in box 2.4.
Errors and omissions
2.9. It follows that, in principle, under a double-entry accounting system, the sum of credit and debit entries must be zero (treating credits as positive and debits as negative). In practice, some transactions are not measured accurately (i.e. errors) and some are not measured at all (i.e. omissions). Data sources used to compile the accounts often measure the credit and debit sides from different data sources and may not always do so consistently. For example, non-resident purchases of shares in Australian enterprises from the resident holders or issuers of those shares (credit entries) are largely estimated from data reported by nominees in the Survey of International Investment, while the payments (e.g. foreign currency bank deposits) acquired (debit entries) are reported by the issuers or banks in the same survey. There could be many reasons why these sources may not measure the acquisition side of the share transaction and the corresponding payments, either in the same accounting period or at the same value. To restore the equality of credit and debit entries, a net errors and omissions item is included in the balance of payments accounts.