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

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

3. Goods and services
What is a “good”?
What is a “service”

4. What is a good?
Goods are tangible produced objects, over which ownership can be exercised, which can be exchanged in the economy.
Goods last beyond the moment of production.
Goods can be described and measured through their physical characteristics

5. What is a service?
A service is an action (a productive activity) carried out for the benefit of others, which
alters the mental or physical state of the recipient or their possessions or
facilitates the business or private activities of the recipient.

6. Unlike a good, A service is not tangible A service is delivered and consumed in the act of production – it does not last beyond the action (although the effects do) In order to record a service in an account, both the character of the service must be known, and the terms on which it is provided

7. Goods / services – special cases
Intangible assets – e.g. recipe for Coca Cola
Not tangible, but has more in common with goods than services – ownership, lasts beyond moment of “production”
Intellectual property is considered as a good

8. Special cases Margin services – e.g retailing, banking
Individual services – health, education
Collective services – Police force, civil service

9. Basics of Goods and Services account
The accounting balance of the Goods and Services account results from the match of selling and purchase value for each exchange
See the next diagram for a simple picture of the flow of goods and services in the economy

10. Goods and Services diagram.pdf The Goods and Services account.docx

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

12. Goods and services account
Shows the balance of supply and demand
Both for single products, product groups, and the whole economy
Domestic output is valued at basic prices
To match demand at purchaser prices, net product taxes value must be added

13. RESOURCES
USES
P.1 Output
P.2 Intermediate consumption
D.21 Taxes on Products
P.3 Final consumption
D.31 Subsidies on products
P.5g Gross Capital Formation
P.7 Imports
Note that the usual convention of having resources on the right, uses on the left of the account is reversed as we are emphasising the flow of goods and services rather than the corresponding monetary payments
P.6 Exports

14. 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.

15. Final consumption (P.3, P.4)
Time of recording and valuation (ESA 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.

16. Final consumption (P.3, P.4)
Time of recording and valuation (ESA ):
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.

17. 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).

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

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

20. 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

21. Consumption of fixed capital
Consumption of fixed capital (ESA ) 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.

22. 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 ).
Imports of goods and services consist of transactions in goods and services (purchases, barter, and gifts) from non-residents to residents (ESA ).
Imports and exports of goods and services are distinguished into:
(a) intra-EU deliveries;
(b) imports and exports outside the EU.

23. 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.

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