Accounting system-example iii, Macroeconomics

Assignment Help:

 

ACCOUNTING SYSTEM-EXAMPLE III 

Now suppose the Jam Co. manufactures some herbal chemicals and flavors which it sells partly to Extracts Co., partly to Bottling Co., some are consumed in its own production process and some are sold directly to households. Also, some households buy fruit extracts directly from the extracts company. The accounts are as follows: 

                                        Extracts Co. 

 

               239_Production Account.png

 

                              Jam Co. 

             872_Production Account.png

 

 

 

 

 

 

 

                                   Bottling and Distribution Co. 

                          480_Production Account.png

 

 

The consolidated production account can be drawn up in which all transactions within and among the firms are netted out: 

                                        Production Account 

 

                       1203_Production Account1.png

 

 

                                     Household Account 

                    1173_Production Account13.png

 

 

GNP: Market value of all final sales = 320 + 30 + 10                                             

                                                   = 360

GNI: All factor incomes earned      = 290 + 70 = 360

We can set up an input-output account for this miniature economy showing transactions within the productive sector and between the productive sector and the household sector. 

                                                        Transactions Table 

 

719_Production Account13.png

 

 

 

The inner table of first three rows and first three columns show the transactions within the productive sector, viz. sales and purchases of intermediate inputs. These are netted out from the national income accounts. The last row shows the value of labor and ownership services provided by the households to the three firms; or in other words 'value added' in the production sector; these constitute the factor incomes (GNI). The last column shows the purchases of households financed from these incomes (GNP).

Suppose a part of the output of bottled jam is sold by the Bottling Co. to the Extracts Co. which distributes it free to its workers at lunch time. How will this be accommodated in national accounts? 

 

 

 

 

 

 

 

 

 

 


Related Discussions:- Accounting system-example iii

What are the social economic and non economic factors, What are the social ...

What are the social economic and non economic factors? Development is also a procedure involving change in some social economic and non economic factors comprising: • Econom

Differentiate between actual and potential output, Differentiate between Ac...

Differentiate between Actual and Potential output.  Actual output is that level which economy in fact produces. In contrast, potential output is the aggregate capacity output o

Pine village needs some additional recreation fields, Pine Village needs so...

Pine Village needs some additional recreation fields. Construction will cost $225,000 and annual O&M expenses are $85,000. The city council estimates that the value of added youth

Explain the real wage with example, Explain the Real wage with example ...

Explain the Real wage with example Consider following scenario. You work full time and during January 2008 you make 2000 euro after tax. A specific basket of services and good

Illustrate the yield to maturity each bond, Consider following 5,000 value ...

Consider following 5,000 value securities. Bond Coupon Rate Selling price coupon payment yield to maturity% 6% $5000 6% $5500 10% $5000 12% $4500 A. Are those securities abov

What are the changes in the exchange rate, What are the Changes in the exch...

What are the Changes in the exchange rate Assume that United States is our home country and that current euro exchange rate in direct notation is SD= 1.5 (euro/USD). In indirec

MR, Question 1: Consider a two-period, two-person pure exchange economy. Ut...

Question 1: Consider a two-period, two-person pure exchange economy. Utility functions and endowments are given as follows. u1(x0; x1) = (x0x1)2 and e1 = (18; 4) u2(x0; x1) = ln x0

Economic performance, This 24 year 1 quarter period should offer sufficient...

This 24 year 1 quarter period should offer sufficient insight into the short term and long term correlation between the variables. Figure - A graph showing the trend of

Loretta liver more labs purchased r&d equipment, Loretta liver more labs pu...

Loretta liver more labs purchased R&D equipment costing $200000.00 The interest rate is 5%,salvage value is 20000.00 and the expected life is 10 years. Compute the PW of the deprec

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd