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Unformatted text preview: ST/ESA/STAT/SER.F/76 Department of Economic and Social Affairs 1-:=: Statistics Division Studies in Methods Handbook of National Accounting Series F No. 76 Links between Business Accounting and National Accounting ({-~~ ~ d§ ~ ~ United Nations New York, 2000 NOTE Symbols of United Nations documents are composed of capital letters combined with figures. The designations employed and the presentation of material in this publication do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Where the designation "country or area" appears, it covers countries, territories or areas. Abbreviations: BEA: FC: FIFO: FIS IM: FRB: GCF: GCS: GFCF: INSEE: !SIC: LIFO: NCS: NFC: NIPA: PIM: PV: SNA: SUT: UNSD: Bureau of Economic Analysis (United States of America) Financial corporation First in, first out l'inancial intermediation services indirectly measured Federal Reserve Board (United States of America) Gross capital formation Gross capital stock Gross fixed capital formation Institut national de la statistique et des etudes economiques (France) International Standard Industrial Classification of All Economic Activities Last in, first out Net capital stock Non-financial corporation National income and product accounts (United States of America) Perpetual inventory method Present value System of National Accounts Supply and use tables United Nations Statistics Division ST/ESNSTAT/SER.F/76 UNITED NATIONS PUBLICATION Sales No. E.00.XVII.13 ISBN 92-1-161427-9 Copyright© United Nations, 2000 All rights reserved 1-: CONTENTS ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .. ... ..... . . . .... . . INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 CHAPTER I: COMPILATION OF NATIONAL ACCOUNTS FROM BUSINESS ACCOUNTS: NON-FINANCIAL CORPORATIONS Vu Quang Viet, United Nations Statistics Division A. B. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Statement of incomes and expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 1. Description of the income and expenditure statement ..... .... .. . ... ..... ...... 15 (a) Net sales . . . . . . . . . . . . . . . .. . .. .. ... .. ..... . ..... .. . .. ..... 17 (b) Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Trading companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Manufacturing corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (c) Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... .. .... 19 (d) Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 (e) Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (f) Other income . . . . . . . . . . . . . . . . . . . . . . . . . .. ..... . .... . ....... 20 (g) Other expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 (i) Income from continuing operations ........... ... .. . .... . .. . .... . .. 21 (k) Taxes on income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 (m) Discontinued operations of segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (n) Extraordinary gains and loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 (o) Cumulative effect of change in accounting principle .. .. ............. . ... 22 Note on accounting income and taxable income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Notes on depreciation and depletion . . . . . . . . . . . . . . . . . : . . . . . . . . . . . . . . . . . .. 24 Note on valuation of inventories in output calculation . . . . . . . . . . . . . . . . . . . . . . . . . . 24 2. Relationship between the income statement and SNA accounts .... .. . .. .. ......... 26 3. Intermediate production and income account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 4. Adjustment of intermediate accounts to obtain SNA production and income accounts ...... 30 (a) Inclusion of output for intermediate consumption and capitalized output for own final use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 (b) Adjustment of interest receivable and interest payable . . . . . . . . . . . . . . . . . . . . 31 (c) Adjustment for insurance premiums ...... . ...... . ....... ... . . ..... 32 (d) Adjustment for consumption of fixed capital . . . . . . . . . . . . . . . . . . . . . . . . . . 32 (e) Adjustment for property income attributed to insurance holders . . . . . . . . . . . . . . 33 (f) Adjustment for taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 (g) Comments of final SNA accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 5. OCAM: A case of income statement mandated to serve national account compilation . . . . . . 34 6. Strategies for compilation of production and income accounts ........... . ........ 34 (a) Option 1 .. .. . . .... . ...... . . . . . . . . . . . .. ........ ... ....... 34 (b) Option 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 (c) Option 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 C. Changes in financial position and balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 111 1. Description of a business balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 (a). Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 (b). Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . .... . . . . . . . . . . 50 (c) Land and natural resources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 (d) Other long-term assets . . . . . . . . . . . . .... . . . . . . . . . . . . . . . .. ....... 51 (e). Current liabilities .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 (t) Long-term debt .. . . . . . . . . . . . . . .. ....... . ... . ... . ...... . .... 54 (h) Shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ... 54 2. Description of statement of changes in financial position ... . . . . . . . . . . . .. . . ...... 55 (a) Recording of fixed assets and depreciation in business balance sheets ..... ..... 56 (b) Recording of bonds in business balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . 58 3. SNA capital and financial accounts . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . 58 Adjustment of capital and financial accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 4. SNA balance sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 D. Revaluation in business and national accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Appendix 1: Appendix 2: Revaluation of bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 OCAM income statement and balance sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 CHAPTERD USE OF BUSINESS COST ACCOUNTING TO DETERMINE THE COST OF A PARTICULAR PRODUCT IN A MULTI-PRODUCT ENTERPRISE Francis Rousse, Consultant, and Vu Quang Viet, United Nation Statistics Division A. B. C. D. General accounting and cost accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73 Enterprise and establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .... ... 74 1. Cost accounting in the general framework of business accounts . . . . . . . . . . . . . . .... . 75 2. Cost accounting in the SNA framework ... . ... .. . . . . . . . . . . . . . . . . . . . .. . ... 77 General methodology used in cost accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 1. Direct costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 2. Full costing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . 78 3. Allocation techniques ....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 79 Implication of cost accounting for SNA data collection ... . .. . ..... . . . . . . . . . . . . . . . . . . 80 Appendix 1: Appendix 2: An example of micro costing decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Example of an allocation process to production departments . . . . . . . . . . . . . . . . . . . .. 83 CHAPTER ill RECORDING OF CHANGE IN INVENTORIES IN THE SNA AND IN THE BUSINESS ACCOUNTS - A CASE STUDY OF CANADIAN PRACTICES Kishori Lal, Statistics Canada A. B. Overview . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Canadian practices .... ..... ........ .. ...... .. . .... . . . .. ....... . ..... . .. 1. Farm inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2. X-11-ARIMA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3. Inventories for manufacturing, wholesale and retail industries .. . . . . . . . . . . . ..... .. 4. Prices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ....... . ....... . .. . .. 5. The calculation at Statistics Canada . . . . . . . . . . . . .... . .. . .. . . . . . . . . . . . . ... 6. Deflators . . . . . . . . . . . .. . .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... 7. Revaluers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv 85 86 87 87 88 89 89 89 90 C. D. E. Statistics Canada calculation versus the 1993 SNA calculation . . . . . . . . . . . . . . . . . . . ....... 90 1. Rebasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 2. Annual input-output tables . . . . . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . .. ... 91 3. Data detail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91 4. Reliability ... ...... .. . . . . . . . . . . . ........ . . . . . . . . . . . . . . . . . . . . . . . 94 Change in inventories under conditions of high inflation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94 Comment on results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 95 Concluding remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 CHAPTER IV USING BUSINESS ACCOUNTS TO COMPILE NATIONAL ACCOUNTS: THE FRENCH EXPERIENCE Patrick Augeraud, Institut national de la statistique et des etudes economiques, France, and Jean-Etienne Chapron, United Nations Statistics Division A. B. C. D. From standardized tax statistics to the intermediate system of enterprises: some remarks 1. Origins (1947-1967) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97 2. The intermediate system of enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...... 98 3. The intermediate system of enterprises in national accounts today . . . . . . . . . . . . . . . . . . 99 (a) Production approach ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. ....... 99 (b) Expenditure approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 (c) Income approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 (d) Data production schedule .... . ....... .. ... .. . . . . . . . . . . . . . . . . . . 100 4. Purposes of the intermediate system of enterprises for national accounts . . . . . . . . . . . . . 100 (a) Ensuring an exhaustive coverage, by kind of economic activity, of non-financial enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 101 (b) Making individual data cohere, with a view to further aggregation . . . . . . . . . . . 101 (c) Building a preliminary framework for economic analysis .. .... . . . . . . . . . . . 101 Input to the intermediate system of enterprises: collection and processing of individual accounting data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 1. Main sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102 (a) Data collected by the tax administration . .... . .... .. . . . . . . . . . . .. .... 102 (b) Data from surveys of enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 (c) Comparison of sources for large enterprises . . . . . . . . . . . . . . . . . . . . . . . . . 104 2. Individual data processing ....... .. . . . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . 104 (a) In search of coherence . . . . . . . . . . . . . . . . . . .... . . . . . . . . . . . . . . . . . 104 (b) A selective processing of anomalies and discrepancies at the micro-level ....... 105 (c) Control of data coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 Building the intermediate system of enterprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 (a) Main features . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 (b) The conceptual framework of the intermediate system of enterprises . . . . . . . . . 106 (c) The four intermediate systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 2. Intermediate system of enterprises - Industrial and commercial profits . . . . . . . . . . . . . . 108 (a) Enterprises with 20 or more employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108 (b) Enterprises with fewer than 20 employees . . . . . . . . . . . . . . . . . . . . . . . . . . 110 3. Intermediate system of enterprises - Non-commercial profits 111 4. Intermediate system of enterprises - Agricultural profits . . . . . . . . . . . . . . . . . . . . . . . 112 5. Intermediate system of enterprises - Other non-financial entities . . . . . . . . . . . . . . . . . . 112 From intermediate system to national accounts' central framework . . . . . . . . . . . . . . . . . . . . . . 113 l. Basic principles . . . . . . . . . . . . . . . . . . . . ... ....... .. . .. . . . . . . . . . . . . . . 113 2. Concrete adjustments . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . .. . . . . . . . . . . . . . 114 v E. (a) (b) (c) (d) 3. Before Conclusion . . Adjustments estimated from enterprises' individual accounts .. ..... .. .. .. . . Adjustments estimated from detailed supply and use accounts . . ... . ... .. . .. Adjustments estimated from distributive transactions accounts . . . . . . . . . ..... Adjustment for under-reporting: the underground economy . . . . . . . . ... . ... the final synthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . .. . . .. . . .. . .. .. . ... ... . .. .. . . . . . .. . .. . . . .. . ... . . . . . . 114 114 115 116 117 117 118 Bibliography . CHAPTER V USE OF BUSINESS ACCOUNTS IN THE COMPILATION OF UNITED STATES NATIONAL ECONOMIC ACCOUNTS Robert P. Parker, Bureau of Economic Analysis, United States Department of Commerce ·A. B. C. D. E. Business accounts in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Tax return information . . . . . . . . . . . . . . . . . . . . . . . . . . . .... . .. ..... ..... 2. Financial accounting information . . . . . . . . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . Preparation of the national income and product accounts (NIPA) . . . . . . . . . . . . . ..... ..... Use of business accounts . . . . . . . . . . . . . . .. ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. NIPA .... . . . . . . .. ... ... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 2. Balance sheets . . . ~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Issues in using business accounts .... .. .... . . . . . . . . . . . . . . . .. . . .. .. .... . .. .. . Improving the use of business accounts . ... . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 121 122 122 123 123 124 124 126 United States national income and product accounts (NIPA): Summary methodologies .... Source data used in the flow of funds balance sheets . . . . . . . . . . . . . .... .. . . . . . . Classifications of production in the national income and product accounts (NIPA) . . . . . . . Relation of corporate profits in the national income and product accounts (NIPA) to corresponding measure as published by the Internal Revenue Service (IRS) . . . . . . . . . 128 145 148 Appendix 1: Appendix 2: Appendix 3: Appendix 4: 152 CHAPTER VI LINK BETWEEN BUSINESS ACCOUNTS AND NATIONAL ACCOUNTS FOR THE NON-FINANCIAL SECTOR Ching Hea Choo, Department of Statistics of Malaysia A. B. Introduction to the compilation of the SNA institutional sector accounts in Malaysia . . . . . . . . . . . 153 1. Overall framework of the Malaysian institutional sector accounts 154 2. Non-financial sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 154 3. Financial sector .. .. .. .. . . . . . . . . . . . . . . ... . . . . . . . . . . . . . . . . . . . . . . . . 155 4. General government sector . . . . . . . . . . . . . . . . ... . . . .. . . .. . .. . .... . .... 155 5. Household sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155 6. Rest of the world sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 Compilation of the accounts for the non-financial sector .... . .. . ..... .... .... . ... . .. . 156 1. Sources of data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .... ..... . . . . . . . 156 (a) Common Questionnaire (CQ) survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156 (b) Financial survey (FS) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 158 (c) Estate survey .... . . . . . . . . . . . . . . . . . . . . . . . . . ..... ... ..... ... 158 (d) Business accounts . . .. .. .. . . . . . . . . . . . . . . .... . . .. .... . . . . .._.. 158 2. Use of the Common Questionnaire survey and the estate survey data for the compilation of the institutional accounts .... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..... . ..... 159 (a) Production account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 vi C. (b) Generation of income account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (c) Primary income account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (d) Secondary distribution of income account . . . . . . . . . . . . . . . . . . . . . . . ....
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