1. National Accounting
21/05/2019
Dr. Amr Nazieh

2. Ch 2: The basic concepts of the National Accounting
21/05/2019
Dr. Amr Nazieh

3. Ch 2: The basic concepts of the National Accounting
Overall Examples:
(1)
The following are related to the different sectors of the national economy:
21/05/2019
Dr. Amr Nazieh

4. Ch 2: The basic concepts of the National Accounting
Intermediates
Indirect tax
Gifts
Marketable value of output
Sector 14 -- 4 40
Agriculture 6 16
Minerals 20
100
Conversion indust. 10
Construction
Electricity 2 12
Transport 8 24
Wholesale
Bank
Others
21/05/2019
Dr. Amr Nazieh

5. Ch 2: The basic concepts of the National Accounting
Further information :
(1) Value of foreign factors of production not resident, shared in national production 16 millions.
(2) Value of income due to local factors of production, shared in production of foreign countries 6 millions.
(3) Depreciation of the national capital 10 millions.
21/05/2019
Dr. Amr Nazieh

6. Ch 2: The basic concepts of the National Accounting
Required :-
1-The calculation of the gross local production according to the factor costs.
2- The calculation of the gross national production according to the factor costs.
3- The calculation of the net national production according to the factor costs
21/05/2019
Dr. Amr Nazieh

7. Ch 2: The basic concepts of the National Accounting
Solution:-
(1) Calculation of the gross local production according to the factors costs
= National production at market price (after exclude any intermediates) (-) indirect taxes (+) production subsidiary ( gifts or donations).
21/05/2019
Dr. Amr Nazieh

8. Ch 2: The basic concepts of the National Accounting
For Agriculture for example:
= (40 – 14) – =£E 30
Therefore :
Gross local production according to the factors costs =
(252 – 104) – = £E 120
21/05/2019
Dr. Amr Nazieh

9. Ch 2: The basic concepts of the National Accounting
Total domestic production at factor costs
(5) = ( )
Gifts
(4)
Indirect tax
(3)
Intermediates
(2)
Marketable value of output
(1)
Sector 30 4 -- 14 40
Agriculture 6
--- 16
Minerals 46 20
100
Conversion indust. 10
Construction
Electricity 2 12
Transport 8 24
Wholesale
Bank
Others
120 18
104
252
Total
21/05/2019
Dr. Amr Nazieh

10. Ch 2: The basic concepts of the National Accounting
(2) The calculation of the national production to factor costs = Total domestic production at factor costs (£E120) (+) Income to national factors of production, shared in foreign countries (£E6). (-) Income to foreigners, not resident in Egypt (£E 16) =£E 110
21/05/2019
Dr. Amr Nazieh

11. Ch 2: The basic concepts of the National Accounting
(3) the calculation of the net national production at factor costs=
Total national production at factor costs (£E 110)
(-) Deprecation of national capital(£E 10)
= £E 100 millions.
21/05/2019
Dr. Amr Nazieh

12. Ch 2: The basic concepts of the National Accounting
Overall Examples:
(2)
Suppose that a three production units, K,L and M are existing in a certain economy — Products of each unit are considered as an intermediate product to the following unit. The following data are extracted from the records of the previous units regarding the year 2003 (.000):
21/05/2019
Dr. Amr Nazieh

13. Ch 2: The basic concepts of the National AccountingM L K
Items
16000
10000
Purchases from other entities
200
400
Beginning inventory
1000
1200
Ending inventor
2400
Sales
21/05/2019
Dr. Amr Nazieh

14. Ch 2: The basic concepts of the National Accounting
Required :-
Determine the national production
21/05/2019
Dr. Amr Nazieh

15. Ch 2: The basic concepts of the National Accounting
Solution:-
(1) Solution according to the value add method
Unit K:-
Factors of production = Purchases - Changes in inventory
= zero
Value added = – zero = £E 10000
21/05/2019
Dr. Amr Nazieh

16. Ch 2: The basic concepts of the National Accounting
Unit L:-
Factors of production = Purchases - Changes in inventory
= – ( )
= £E 9200
Value added = – 9200 = £E 6800
21/05/2019
Dr. Amr Nazieh

17. Ch 2: The basic concepts of the National Accounting
Unit M:-
Factors of production = Purchases - Changes in inventory
= – ( )
= £E 15200
Value added = 2400 – = £E (12800)
21/05/2019
Dr. Amr Nazieh

18. Ch 2: The basic concepts of the National Accounting
Value added for all units:- =
= £E4000
21/05/2019
Dr. Amr Nazieh

19. Ch 2: The basic concepts of the National Accounting
(2) Solution according to the final national production method
The final production will be determine according to the value of sales to final consumer and the total change in the inventory.
21/05/2019
Dr. Amr Nazieh

20. Ch 2: The basic concepts of the National Accounting
Final production of all units
= Final sales –(changes in inventory)
= ( ) – ( )
= £E 4000
21/05/2019
Dr. Amr Nazieh