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

One least-cost way to make wooden boxes, There is only one least-cost way t...

There is only one least-cost way to make wooden boxes for shipping tomatoes, and any firm that makes them has a cost function given by 2 TC q q = + + 200 .005 .The inverse market d

Free trade help the u.s. economy, Why and how does free trade help the U.S....

Why and how does free trade help the U.S. economy? How might free trade hurt the U.S. economy?

Price of dvd players decreases, If the price of DVD players decreases, we c...

If the price of DVD players decreases, we can expect that the demand for DVDs will: a. increase. b. be unaffected. c. shift left. d. Decrease

Classical business cycle theory, The rate of interest in the UK also showed...

The rate of interest in the UK also showed very interesting results, to an impulse shock on oil price. The middle left graph from Fig 4.4 shows the results. Initially, in the short

Benefits and disadvantages of each scenario, Do you think that public admin...

Do you think that public administrators should be restricted to only laid down rules in the discharge of their duties as espoused by Max Weber or should they have some amount of di

Calculate the accounting breakeven point of a firm, Based on the recent su...

Based on the recent success of Ontario tennis star Milos Raonic, Nike Canadawill produce new state of the art tennis racket with a red maple leaf on the strings. Mike expects to se

Important points about the classic model, Q. Important points about the cla...

Q. Important points about the classic model? The most important points about the classic model are as following:  Monetary and fiscal policy can't affect the GDP or unem

How much money can banks create, Q. How much money can banks create? Do...

Q. How much money can banks create? Does that mean that banks can create an unlimited amount of money? No the answer is no - it would require them to lend an unlimited amount o

Calculate private market equilibrium, Consider the following Marginal Priva...

Consider the following Marginal Private Cost (MPC), Marginal Social Cost (MSC) and market demand curves. These curves relate to a market for a product, the production of which gene

How to evaluate total savings, Q. How to evaluate total savings? Total...

Q. How to evaluate total savings? Total savings Total savings S(r) depends positively on the real interest rate Remember that total saving

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