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

Monetary policy, what is the importance of credit multiplier

what is the importance of credit multiplier

Pr0ject 2, how long will be the solution

how long will be the solution

Financial and real investment, Financial and Real Investment Financial ...

Financial and Real Investment Financial investment simply means transfer of right from one party to another. While one party has made investment, the other has made disinvestme

Overnight interest rate of central banks, Overnight interest rate of Centra...

Overnight interest rate of Central banks When the central bank buys government securities, it purchases from many individuals, companies and institutions. Deposits and reserves

Impact of an increase in thriftiness, Consider the impact of an increase in...

Consider the impact of an increase in thriftiness in the Keynesian-cross analysis. Assume that the marginal propensity to consume is unchanged, but the intercept of the consumption

What is meant by the term national debt?, When a government spends more tha...

When a government spends more than it receives in taxes; it runs a budget deficit, which is generally covered by issuing debt obligations to domestic and/or international investors

Macroeconomics , 1. Nations trade what they produce in excess of their own ...

1. Nations trade what they produce in excess of their own consumption to: A) generate jobs for the domestic economy. B) earn “good will” from the World Bank. C) prevent chronic sur

Budget constraint, The consumer's utility function is u(x1,x2) = (x1) (x2)^...

The consumer's utility function is u(x1,x2) = (x1) (x2)^2 (a) Graph his budget constraint for p1 = 3, p2 = 2 and M = 900, and write down the equation for his budget line. (b)

Differentiate demand elasticity and supply elasticity, Describe elasticity?...

Describe elasticity? Differentiate demand elasticity and supply elasticity? What is arc elasticity? Please describe graphically with proper mathematical representation?

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