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

Calculate weights of a and b in the global minimum variance , Consider two ...

Consider two perfectly negatively correlated risky securities A and B. A has an expected rate of return of 12% and a standard deviation of 17%. B has an expected rate of return of

Neo-classical theory of trade, explain the neo-classical theory of trade an...

explain the neo-classical theory of trade and show the difference between this and the classical approach, as wellas the similarities

State the term- - gdp is a flow, State the term- - GDP is a flow Lastl...

State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni

Calculating interest rates on a yearly basis, Calculating interest rates on...

Calculating interest rates on a yearly basis If maturity is different from one year, interest rate is generally recalculated to a corresponding one year rate. For instance con

NATIONAL INCOME VARIATION, give and explain the different causes of nationa...

give and explain the different causes of national income variation

Objective of empirically analyses, The aim of this paper is to observe and ...

The aim of this paper is to observe and interpret the correlations between oil price changes, and changes to key macroeconomic indicators. From this we will be able to observe if t

Consumption, Consider two consumers, A and B. A and B both want perfect con...

Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different income streams.

Mec, Lucas’ point of view, what are the limitations of the Keynesian model?...

Lucas’ point of view, what are the limitations of the Keynesian model? What improvements does he suggest?

#title. phillip curve, what does phillip curve signify? how do you reconcil...

what does phillip curve signify? how do you reconcile the difference in the shap of the curve in the short run and the long run?

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