National Accounting

National Accounting Ch 1: The nature of the national accounting. Ch 2: National Commodities. Ch 3: The basic concepts of the national accounting. Ch 4: Preparing the national accounts.

Ch 1: The nature of the national accounting (1)The definition of national accounting

Ch 1: The nature of the national accounting National accounting as an accounting branch has been affected and developed as a result of sequential development in other branches, as; the economics, politics and statistics.

Ch 1: The nature of the national accounting National accounting is defined as “ the accounting branch, which aims at measuring and interpreting the economic changes and the national level and indicating to the results of the national economy to support the state policies.

Ch 1: The nature of the national accounting All public sectors should be presented in the national accounts, and results should be available to gained and support the measurement of the national performance.

Ch 1: The nature of the national accounting (2)The different sectors of the society

Ch 1: The nature of the national accounting Two group sectors represent the main focus of concern of the national accounts, as; the state as whole and the other structured sectors.

Ch 1: The nature of the national accounting The other structured sectors include: (1) The business sector: This sector includes all entities and units (firms) which are consuming the factors of production to produce commodities. This sector includes all types of firms, either public or private.

Ch 1: The nature of the national accounting (2) The household sector: This sector includes all consumers of commodities and services produced by the previous sector. In addition to the consumers, this sector includes also, the non for profit organization.

Ch 1: The nature of the national accounting Sometimes, consumers may represent a factors of production within the other factors of the first sector. Therefore, this group of persons may be considered as a multi-sector participants.

Ch 1: The nature of the national accounting Examples of this type may includes employees who work in the first sector, in the mean time, they will still remain consumers to the products of this sector.

Ch 1: The nature of the national accounting (3) The Governmental sector: This sector includes the different ministries and the local governmental entities, which offer services free.

Ch 1: The nature of the national accounting (4) The rest of the world sector: This sector includes the different transactions between the previous three sectors and the outside world, which contain mainly imports and exports.

Ch 1: The nature of the national accounting (3)The mixed Economy, Markets, and Politics

Ch 1: The nature of the national accounting Mixed economy: Is one in which government supplies a considerable amount of goods and services and regulates private economic activity.

Ch 1: The nature of the national accounting In mixed economies, provision of a significant amount of goods and services takes place through political institutions.

Ch 1: The nature of the national accounting Pure market economy: Is one in which private firms for profit and all exchanges of goods would supply virtually all goods and services which would take place through markets, with prices determined by free interplay of supply and demand .

Ch 1: The nature of the national accounting In pure market economies, individuals would be able to purchase goods and services freely, according to their tastes and economic capacity.

Ch 1: The nature of the national accounting (4)Circular Flow in the Mixed Economy

Ch 1: The nature of the national accounting In pure market economies, all productive resources are privately owned by individuals who decide how to use these resources. The individual, together with others living in their households, make decisions about how to use the resources they own.

Ch 1: The nature of the national accounting Their decisions are influenced in part by market prices for goods and services. They offer their resources for sale as inputs in the marketplaces.

Ch 1: The nature of the national accounting Private business firms are organized to hire resources in input markets to produce goods and services desired by household members. The products, In turn, are sold by businesses to households in output markets.

Ch 1: The nature of the national accounting In a perfectly competitive market economy, no seller can influence prices. Instead, prices are determined by free play of the forces of supply and demand.

Ch 1: The nature of the national accounting Given market prices, households decide to sell the resources they own, and firms decide which inputs to buy and what outputs to produce. This process is summarized as a simple circular flow.

Ch 1: The nature of the national accounting

Ch 1: The nature of the national accounting Let's first look at the relationships that would exist in the' economy if there were no governments. The lower loop of the diagram represents the input markets, where households sell the resources to firms for market-determined prices.

Ch 1: The nature of the national accounting The upper loop is the output markets, where an array of outputs is offered for sale to households, which, in turn, pay for them with the dollars earned from the sale of their members‘ productive resources.

Ch 1: The nature of the national accounting The distribution of income depends on the distribution of ownership of productive resources and the prices and other financial returns the resource owners receive from employment of those resources in production.

Ch 1: The nature of the national accounting The figure depicts government activities in the central portions of the diagram; Governments purchase inputs from the households and acquire ownership rights of such productive resources as land and capital.

Ch 1: The nature of the national accounting Governments use these inputs to provide goods and service that are not sold to households and business firms but are made available through no market rationing. However, governments do sometimes own and operate enterprise.

Ch 1: The nature of the national accounting Governments also purchase outputs of business firms, such as paper, cars, bricks, and guns. To pay for them, government requires businesses and households to make various payments such as taxes, charges, and fees.

Ch 1: The nature of the national accounting The government uses the productive resources it acquires to produce goods and services including national defense, roads, schooling, police and fire protection, and the many other essential services.

Ch 1: The nature of the national accounting (5)Objectives of the National Accounting