The balance of payments is a framework that records a country’s economic transactions with the rest of the world over a period. It is organised into two main components. The first is the current account, which captures trade in goods and services, primary income such as investment income and compensation of employees, and secondary income such as transfers. The second component records cross-border capital flows and changes in financial claims and liabilities. In modern descriptions, this is split into the capital account and the financial account, with the financial account typically being the larger and more significant. Many exam questions simplify this by referring to the current account and the financial and capital account together as the two accounts used to measure the balance of payments. The key idea is that current transactions and capital and financial flows must reconcile through accounting identities, with any imbalance reflected in financing flows. Options that describe services alone or domestic categories do not represent the recognised balance of payments structure.