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

Economic functions of money, Money is generally considered to have three ec...

Money is generally considered to have three economic functions: A medium of exchange. This is its most significant role. Without money we would live in a barter economy wher

Demand, Demand: Demand is quantity of a good buyer who wishes to purcha...

Demand: Demand is quantity of a good buyer who wishes to purchase at each conceivable price. The law of demand explains us that if the price of certain commodity increases,

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

Gpd., the whole explanation of dpd

the whole explanation of dpd

Walmarts website, Over the past month, the 500 customers have downloaded th...

Over the past month, the 500 customers have downloaded the following number of songs from WalMart's website (obviously, they have had more, but we need to use workable numbers): 13

Current value of investment, An investment promised a payoff of $195 two an...

An investment promised a payoff of $195 two and a half years from today. At a discount rate of 75% per year what is the present value of this investment? A. 169.47 B. Not enoug

General principles of marginal and average total cost curves, What are the ...

What are the general principles about marginal and average total cost curves? General principles which are always true concerning a firm’s marginal and average total cost curve

Distinguish static and dynamic gains from trade, Question 1: Critically...

Question 1: Critically analyse the costs of inflation. Which of these items is likely to have encouraged many governments in their adoption of inflation as public enemy number

Aggregate supply - long run equilibrium:graphical analysis, Long Run Equili...

Long Run Equilibrium:Graphical Analysis In the long run the natural rate of output is the level of output to which the economy will tend to adjust in the long run. This indicat

How did economists get it so wrong, Read "How Did Economists Get It So Wron...

Read "How Did Economists Get It So Wrong" by Paul Krugman and second, the blog "History of Economics Playground", by Pedro Duarte, Tiago Mata, Clement Levallois, Yann Grd...etc., t

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