Commerce

Differences between balance of trade and balance of payments

len Alfred Ajibola - Wed, 18th December, 2019 @ 1:51 PM

Topics in Commerce

Principle of Marketing: People as a marketing mix and their importance Principle of Marketing: Positioning as a marketing mix Principle of Marketing: Packaging as a marketing mix Elements of promotion in marketing mix Principle of Marketing: Promotion as a marketing mix Principle of Marketing: Place as a marketing mix Principle of Marketing: Price as a marketing mix Principles of Marketing: The seven principles of marketing mix Factors necessary for division of labour Disadvantages of division of labour Advantages of division of labour Concept of Outbound Marketing Inbound Marketing explained Types of production in commerce Commerce: Definitions and Scopes of Commerce Differences between balance of trade and balance of payments Balance of payment deficit and balance of payment surplus Disadvantages of foreign trade Divisions of foreign trade Advantages of foreign trade

Academic Questions in Commerce

Please click here to see all Questions and Answers

Whatever is being marketed must always provide value to its potential consumers.

  • A. True

  • B. False

Which of the following is not a branch of marketing?

  • A. Merchandising

  • B. Promotions

  • C. Forex

  • D. Search Media Optimization

  • E. Social Media Optimization

  • F. Copywriting

Which of the following is not a characteristics of commerce?

  • A. The only aim of commerce is to make profit

  • B. It is a discontinuous process after profit had been made

  • C. It is accompanied with challenges and uncertainties

  • D. It is 100% business and economic activity

  • E. Transaction processes are always involved in commerce

  • F. It connects the process of production and marketing

Which of the following is not a function of commerce?

  • A. Unnecessary in times of emergencies like earthquakes and wars

  • B. Facilitates mass production of goods

  • C. Influences transportation network within and outside a state

  • D. Attempts to satisfy human needs and wants

  • E. Improves the standard of living

  • F. Acts as an online business link between buyers and sellers

One of the following is a form of division of labour.

  • A. Agonistic division of labour

  • B. Antagonistic division of labour

  • C. Mutualistic division of Labour

  • D. Advanced division of labour

  • E. Solitary division of labour

  • F. Occupational division of labour

A place where people buy homogenous goods in large quantities is called _____.

  • A. Wholesaler's Market

  • B. Goods Market

  • C. Products Market

  • D. General Market

  • E. Commodity Market

  • F. Forex Market

Any activity aimed at getting people interested in a company's product or service is termed _____.

  • A. Commerce

  • B. Economics

  • C. Financial Accounting

  • D. Marketing

  • E. Production

  • F. Distribution

Which of the followings isn't a characteristics of commerce?

  • A. Commerce is solely aimed at making profit

  • B. Commerce is 100% business

  • C. Commerce is a discontinuous process because it eventually satisfies human needs

  • D. Commerce is accompanied by uncertainties

  • E. Transaction processes are always done in commerce

  • F. Commerce connects the processes of production and marketing

Balance of trade and balance of payments:

Let us begin this article by defining what balance of trade and balance of payments are.



Balance of payments is defined as a record showing the relationhip between a country's total payment made to other countries and the total money received (from other countries) within a time period.

Balance of payments can be classified into two. These are:

  1. Balance of payments surplus.

  2. Balance of payments deficit.

    3. Please read more on balance of payment deficit and balance of payment surplus here.


An understanding on balance of trade and balance of payments will give us a better insight into their differences.

Please read the introduction to balance of trade and balance of payments here.


Differences between balance of trade and balance of payments

Below are the differences between a Balance of trade and balance of payments:

Balance of trade

Balance of payments

It is the total value of goods imported and exported by a country during a specific period; usually yearly or annually

It is a record showing the relationship between a country’s total payment made to other countries and the total money received from other countries within a time period

It helps a country evaluate its net profit and net loss incurred only from the importation and exportation of goods

It gives us a proper accountability beyond the importation and exportation of goods

Unilateral and capital transfers are not part of balance of trade

Unilateral and capital transfers are part of balance of payments

It deals with the difference between the exportation and importation of goods only

It deals with the differences between inflow and outflow of foreign exchange

Please read on the differences between scale of preference and opportunity cost.

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Amazing facts in Commerce

With Amazon Smile, you can donate 0.5 percent of your purchases to a charity of your choosing

Check it out here

The brewery, Sankt Gallen in Japan, produces a beer called Un Kono Kuro from elephant's dung

North Korea and Cuba are the only countries in the world where you can't buy Coca-Cola

Amazon is an e-commerce website launched in 1995. It did not make any profit for its first seven years.

Amazon's first profit was in 2003. Its founder 'Jeff Bezos' is the richest man in the world as at 2018/2019

NOTABLE POINTS IN Commerce

Marketing is a broad field of study. Below are branches or divisions of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Marketing is defined as any activity or process aimed at getting people interested in a company’s product or service.

The processes utilized in marketing can take place via posters, public relations campaigns, handbills, social media, radio and television, buses, walls along the streets, the internet or just anywhere.

Below are some of the branches of marketing:

  • Advertising

  • Search Engine Optimization (SEO)

  • Merchandising

  • Branding

  • Promotions

  • Copywriting

  • Social Media Optimization (SMO)

  • Event planning

  • Customer Relationship Management (CRM)

  • Graphic Design

  • Internet Marketing

Please read more on marketing here

Commerce can be defined as the exchange of goods and services, usually for money and on a large scale that will require the transportation of such goods and services.

Commerce is crucial (important) to the life of any nation for the following reasons:

  1. Commerce facilitates the exchange of goods and services which everyone can enjoy, regardless their location or whether the goods is produced within or outside their country.

  2. Commerce creates an awareness of the existence of goods and services through advertising.

  3. Commerce offers employment to a very large number of people in a nation.

  4. Commerce promotes rapid transfer of both oral and written messages through communication.

  5. Commerce determines the standard of living in a nation. This is because the extent of commercial activities is crucial to wealth of a nation.

  6. Commerce makes for the protection against risk in day to day business operations.

  7. Through commerce, there is a steady supply of goods in a nation. This is because commerce ensures that goods produced are stored until needed.

Please read on the functions and characteristics of commerce here

A public company is not owned by an individual; rather it's usually owned by groups or a large number of people.

The shares of a public company are traded freely on the stock exchange.

Below are some features of a public company:

  1. A public company must receive it’s training certificate to commence business.

  2. The minimum membership is two while the maximum membership is limitless.

  3. A public company has a legal status. It can sue and be sued.

  4. A public company files and publishes its annual reports, including its accounts.

  5. The liability of its members is limited.

  6. The shares are easily transferrable through the stock market.

  7. A public company can issue debentures to be secured as its assets.

Please read on limited liability company, its advantages and disadvantages here

There are seven elements of the marketing mix. These are:

  1. Product: Anything thing that satisfies a consumer’s need is referred to as a product. Product may come in the form of manufactured goods, raw materials or services.

  2. Price: Price is defined as the exchange value of goods and services supplied. In simple terms, it serves as a mechanism of exchange.

  3. Promotion: It involves all the processes that concerns with how business organizations should inform their customers about its product. If done properly, the demand of product will be increased. Promotions can take the form of advertising, search engine optimization, social media marketing, trade fairs exhibition and so on.

  4. Place: The place as a marketing mix concerns variables such as location and transport facility where the distribution of goods and services take place.

  5. Packaging

  6. Positioning

  7. People

Think of marketing mix as the set of marketing tools that an industry or company uses to drive or accomplish its marketing objectives in the target market

Please read on the principles of marketing mix here