CREDITS and DEBITS in Balance OF PAYMENTS Accounting (3)

category III: short-term nonofficial financial flows . this category records transaction in short-term assets (maturity of less than one year) . the transaction are basically private ; that is,they are carried out by parties other than central bank or monetary authorities . as in category II,an increase in foreign holdings of these assets in the home country is a credit item and a decrease is debit item . Alternatively if the home country is private sector increase its holdings of these assets in foreign countries , the entry is a debit ; a decrease is a credit .
category IV; Direct investment and other long-term financial flows. This category and the next two constitute the financial account in a country is balance of payments.It is concerned with changes in holdings of long-term real physical assets and financial as-sets,where long-term assets in the home country held by foreign citizens,corporations,and government( financial inflow to the home country),a credit entry (+ sign ) is made;if a sale of these holdings by foreigners causes a decrease,a debit entry (- sign) is made(financial outflow from the home country).Alternatively,if domestic citizens,corporations,and governments increase their holdings of long-term assets abroad,a debit entry is made(financial outflow from the home country); if a sale of these assets decreases holding a broad by the home country , a credit entry is made ( financial inflow to the home country as the sale proceeds are brought home ) . An easy way to remember this treatment is to note that credits represent a net increase in holding of assets in the home country by the foreign country and debits represent a net increase in holdings of asset in foreign countries by the home country .