Goods and services account

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Presentation transcript:

Goods and services account THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

Overview Transactions in products Measurement of production and output Market and non-market activities Final consumption Gross capital formation Exports and imports

Main categories of transactions in products (P) P.1 Output; P.2 Intermediate consumption; P.3 Final consumption expenditure; P.4 Actual final consumption P.5 Gross capital formation; P.6 Export of goods and services; P.7 Import of goods and services.

Goods and services account USES RESOURCES Final consumption Imports Gross fixed cap. formation Taxes on imports Change in inventories Other taxes on products Intermediate consumption minus subsidies on products Export Output (basic prices)  

Production account USES RESOURCES Intermediate consumption Output (basic prices)   VALUE ADDED (BASIC PRICES)

Measurement of production Definition of production (ESA 2010 3.07): Production is an activity carried out under the control, responsibility and management of an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services. Production does not cover natural processes which have no human involvement or direction, such as the unmanaged growth of fish stocks in international waters, but production does include fish farming.

Measurement of production Production includes (ESA 2101 3.08): (a) the production of all individual or collective goods and services that are supplied to units other than their producers; (b) the own-account production of all goods that are retained by their producers for their own final consumption or gross fixed capital formation.

Measurement of production Production includes (ESA 2010 3.08): Own-account production of goods by households: (1) own-account construction of dwellings; (2) the production and storage of agricultural products; (3) the processing of agricultural products; (4) the production of other primary products, like mining salt, cutting peat and carrying water; (5) other kinds of processing, like weaving cloth, the production of pottery and making furniture.

Measurement of production Production includes (ESA 2010 3.08): (c) the own-account production of dwelling services by owner/occupiers; (d) domestic and personal services produced by employing paid domestic staff; (e) volunteer activities that result in goods. Examples of such activities are the construction of a dwelling, church or other building. Volunteer activities that do not result in goods – e.g. care-taking and cleaning without payment – are excluded.

Measurement of production Production definition (ESA 2010 3.08): The activities listed above in points (a) to (e) are included as production irrespective of being illegal or not-registered at tax, social security, statistical and other public authorities. Own-account production of goods by households is recorded when this type of production is significant, i.e. when it is quantitatively important in relation to the total supply of that good in a country.

Measurement of production Production excludes (ESA 2010 3.09): production of domestic and personal services that are produced and consumed within the same household: (a) cleaning, decoration and maintenance; (b) cleaning, servicing and repair of household durables; (c) preparation and serving of meals; Etc.

Market and non-market activities Two different types of producers may be distinguished: Market producers Non-market producers Different valuation principles of valuation should be applied for the two categories.

Output Output (P.1) is the total value of products created during the accounting period: (a) market output (P.11); (b) output produced for own final use (P.12); (c) non-market output (P.13).

Market and non-market activities Valuation of output (ESA 2010 3.42, 3.43) All output is to be valued at basic prices, but specific conventions hold for: (a) the valuation of non-market output; (b) the valuation of total output of a non-market producer (local KAU); (c) the valuation of the total output of an institutional unit of which a local KAU is a non-market producer.

Measurement of production - housing Rented dwellings: output equals value of the rent Owner-occupied dwellings: - The owner-occupier is considered a producer of housing services. - Output is equal to the rent paid for a comparable rented house - Costs of repairs and decoration are - > intermediate consumption or - > final consumption - major improvements > capital form

Measurement of production - trade Production value = trade margin + sales of goods purchased for resale - purchases of goods for resale + change in inventories of goods for resale including normal losses due to: - wastage - theft = trade margin

Market and non-market activities Valuation of output Output for own final use is valued at the basic prices of similar products sold on the market. The total output of a non-market producer is valued at the total costs of production, i.e. the sum of: (a) intermediate consumption; (b) compensation of employees; (c) consumption of fixed capital; (d) other taxes on production less other subsidies on production.

Intermediate consumption (P.2) Goods and services consumed as inputs by a process of production(ESA 2010 3.88) Points of attention: Delineation with fixed assets - small tools - intangible assets - military weapons Delineation with value added - wages in kind - reimbursements Products used for intermediate consumption are valued at purchaser’s prices

Market and non-market activities Production account of a market producer

Market and non-market activities Production account of a market producer

Market and non-market activities Production account of a non-market producer

Final consumption (P.3, P.4) Two concepts of final consumption are used: (a) final consumption expenditure (P.3); (b) actual final consumption (P.4). Final consumption expenditure is expenditure on goods and services used by households, NPISHs and government to satisfy individual and collective needs. Actual final consumption refers to acquisition of consumption goods and services. The difference between these concepts lies in the treatment of certain goods and services financed by the government or NPISHs but supplied to households as social transfers in kind.

Final consumption (P.3, P.4) Time of recording and valuation (ESA 2010 3.111 pp): Expenditure on a good is recorded at the time of change of ownership; expenditure on a service is recorded when the delivery of the service is completed. Expenditure on goods acquired under a hire purchase or similar credit agreement, and also under a financial lease, is recorded at the time the goods are delivered even if there is no change of ownership at this point.

Final consumption (P.3, P.4) Time of recording and valuation (ESA 2010 3.111-3.113): Own-account consumption is recorded when the output retained for own final consumption is produced. The final consumption expenditure of households is recorded at purchasers' prices. This is the price the purchaser actually pays for the products at the time of the purchase.

Gross capital formation (P.5) Gross capital formation consists of: (a) gross fixed capital formation (P.51g): (1) consumption of fixed capital (P.51c); (2) net fixed capital formation (P.51n); (b) changes in inventories (P.52); (c) acquisitions minus disposals of valuables (P.53).

Gross fixed capital formation(P.51g) Acquisistion less diposals of fixed assets Fixed assets: used repeatedley or continuously in the production process for more than one year Special attention: Delineation with intermediate consumption

Gross fixed capital formation(P.51g) Acquisistion less diposals of fixed assets Included: tangible intangible Excluded: financial assets exceptional losses

Gross fixed capital formation(P.51g) Delineation with intermediate consumption purchase of small tools for production purposes; small repairs; the acquisition of fixed assets to be used under an operational leasing contract

Consumption of fixed capital Consumption of fixed capital (ESA 2010 3.139) is defined as the decline in value of fixed assets owned, as a result of normal wear and tear and obsolescence. The estimate of decline in value includes a provision for losses of fixed assets as a result of accidental damage which can be insured against. Consumption of fixed capital covers anticipated terminal costs, such as the decommissioning costs of nuclear power stations or oil rigs or the cleanup costs of landfill sites.

Exports and imports Exports of goods and services consist of transactions in goods and services (sales, barter, and gifts) from residents to non-residents (ESA 2010 3.158). Imports of goods and services consist of transactions in goods and services (purchases, barter, and gifts) from non-residents to residents (ESA 2010 3.159). Imports and exports of goods and services are distinguished into: (a) intra-EU deliveries; (b) imports and exports outside the EU.

Exports and imports Exports and imports of goods and services do not include: (a) establishment trade; (b) primary income flows to or from the rest of the world, such as compensation of employees, interest and revenues from direct investment; (c) the cross-border sale or purchase of financial assets or non-produced assets, such as land.

Thank you for your attention CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION