Question

What is the reason for an net omissions and errors account?

• A. Reduces errors
• B. It is a balancing item
• C. Increases errors
• D. None of the above

Answer 1

The correct option is B It is a balancing item

The balance of payment of a country must always be in equilibrium a surplus on one account must be met with a deficit of equal magnitude on the other. Thus, the sum of the capital account and the current account must always be 0. In order for the the sum to be exactly equal to 0, the component net commission and errors is added in the calculations.