National Accounting definition concept tools Smirnova Ekaterina Ph

National Accounting: definition, concept, tools Smirnova Ekaterina, Ph. D in Economics Accounting team leader SCHNEIDER GROUP

Contents Main approach to National Accounting • Definition of National Accounting • Main concepts of National Accounting • Main tools for macroeconomic analysis Input-output framework • Definition of input-output framework • Purpose of input-output framework • Structure of input-output framework & Assumptions to follow accounting | erp | import | legal | tax 2

Definition of National Accounting System or approach aimed at: 1 • collecting 2 • summarizing 3 • processing 4 • storing 5 • proving financial information about economic activities accounting | erp | import | legal | tax 3

Main concepts of National Accounting AGENTS: Country Institutional unit Branch Group of branches & units accounting | erp | import | legal | tax 4

Main concepts of National Accounting COMPONENTS: Resources Uses accounting | erp | import | legal | tax 5

Tools for macroeconomic analysis Input-output framework Sequence of national accounts Calculation of Macroeconomic aggregates Integrated economic accounts framework accounting | erp | import | legal | tax 6

Input-output framework: Definition 4 1 5 2 3 accounting | erp | import | legal | tax 7

Purpose / essence Input-output framework: Purpose To show decomposition of economic activities by products & branches To analyze productive structure of National economy To study how products are allocated & consumed by branches & institutional units To show equation of Resources & Uses accounting | erp | import | legal | tax 8

Input-output framework: Structure & assumptions to follow 1 2 3 4 5 • Table of intermediate consumption • Table of Operating account (output) by branches • Table of Operating account (output) by products • Table of Resources / supply by products • Table of Uses / final consumption accounting | erp | import | legal | tax 9

Purpose / essence Input-output framework: Table of intermediate consumption To calculate the amount of intermediate consumption by products & by branches To get the Matrix of technical economic ratios characterizing national economy`s productive structure accounting | erp | import | legal | tax 10

Input-output framework: Table of intermediate consumption Formula to calculate ratios: Aij = Xij / Xj, where Aij — amount of product «i» necessary to produce a UNIT of product by branch «j» ; Xij — amount of intermediate consumption of product «i» by branch «j» ; Xj — effective output of branch «j» / output by branch. accounting | erp | import | legal | tax 11

Input-output framework: Table of intermediate consumption 1 2 3 • Branch is treated as performing ONE type of activity • Trade / commerce line is empty • Administration line is empty 4 • Fictitious branch column is applied to register the amount of intermediate services rendered by FC 5 • Territorial & CIF / FOB adjustment lines are to be empty accounting | erp | import | legal | tax 12

Input-output framework: Table of output by branches Total amount of intermediate consumption by branches GVA = Gross value added Output by branches = effective output for each branch accounting | erp | import | legal | tax 13

Input-output framework: Table of output by branches ASSUMPTION: The amount of GVA for a fictitious branch is to be equal to the total amount of Intermediate consumption, BUT with the opposite (negative) sign, so that Effective output for this branch is ZERO. accounting | erp | import | legal | tax 14

Input-output framework: Table of output by products Allows to get output by Products data by means of transfers adjustments: • Fatal products transfers; • Agricultural products transfers; • Residual sales transfers. Allows to exclude out of a particular branch services & products which do not correspond to its core activity by transferring them to the related branches. accounting | erp | import | legal | tax 15

Input-output framework: Table of output by products 1 2 • Branch is treated as a mono-producer • Total amount for transfers is to be ZERO 3 • Total amount for output by products = output by branches 4 • Amounts stated in output by product line are to be found in the 1 st column of table # 4 accounting | erp | import | legal | tax 16

Input-output framework: Table of resources by products 1 • Output by products within the national economy 2 • Import of goods & services 3 • Trade margins 4 • Transport margins 5 • Customs taxes & duties (on products) 6 • VAT 7 • Subsidies on products 8 • Territorial & CIF / FOB adjustment lines accounting | erp | import | legal | tax 17

Input-output framework: Table of resources by products 1 • Amount of trade margins is to be excluded at the crossing of TRADE line & TRADE MARGINS column 2. 1 • Amount of assurance of imported goods is to be excluded at the crossing of TRADE line & CIF / FOB ADJ. column 2. 2 • Similar amount is to be excluded at the crossing of CIF / FOB ADJ. line & IMPORT OF GOODS column 2. 3 • Equation is achieved by registering a positive amount at the crossing of CIF / FOB ADJ. line & CIF / FOB ADJ. column 3 • Expenses for market services made by residents abroad are to be shown as a single amount at the crossing of TERR. ADJ. line & IMPORT OF SERVICES column accounting | erp | import | legal | tax 18

Input-output framework: Table of Uses (by products) 1 2 3 4 5 6 • Final consumption expenditure of Households • Individual consumption of government • Collective consumption of government • Final consumption expenditure of non-profit institutions • Gross capital formation (GFCF + Variation of stocks + Acquisition / disposals balance of valuables) • Export of goods & services evaluated FOB accounting | erp | import | legal | tax 19

ASSUMPTIONS Input-output framework: Table of Uses (by products) Amount of expenses made by non-residents within the country is to be registered at the crossing of TERR. ADJ. line & EXPORT OF SERVICES column Balance between NR`s expenses within the country & residents` expenses abroad is to be registered at the crossing of TERR. ADJ. line & FC expenditure of HH column accounting | erp | import | legal | tax 20

Thank you for your attention accounting | erp | import | legal | tax 21

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