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

Measurement of national income, what are the two precautions required while...

what are the two precautions required while estimating national income by value added method?

Calculate the average propensity, Question: Table below shows the recen...

Question: Table below shows the recent trends in terms of consumption. (a) (i) Explain what is meant by the term ‘marginal propensity to consume' (MPC) and the ‘averag

Permanet inocme, if your earning records over year has been:Yt=$40000 Yt-1=...

if your earning records over year has been:Yt=$40000 Yt-1=$38000 Yt-2=34000 Yt-3=$32000 YT-4=31000,What is the your permanet income?

Un employment, examine keynesian theory of un employment

examine keynesian theory of un employment

GLOBAL LOSSES, SUPPOSE MR.CHANSA DEPOSIT HIS MONEY INTO BANK-B,HOW WOULD TH...

SUPPOSE MR.CHANSA DEPOSIT HIS MONEY INTO BANK-B,HOW WOULD THE T-BALANCE SHEET LOOK LIKE FOR BANK-B

What is consumption?, "Consumption" is an old name for tuberculosis (TB) th...

"Consumption" is an old name for tuberculosis (TB) that explains how the illness wastes away or consumes its victims. TB is "an ancient enemy" that has plagued human kind for more

Explain about interest rate, Q. Explain about Interest rate? When you b...

Q. Explain about Interest rate? When you borrow money, you normally have to pay a fee for the loan. This fee is frequently known as interest, especially if the fee is proportio

Peoples national bank required reseves, Suppose that the reserve requiremen...

Suppose that the reserve requirement is 10 percent and the balance sheet of the People's National Bank looks like the accompanying example. a. What are the required reseves of P

Combination price of capital decreased, In reference to the above question,...

In reference to the above question, assume you know the combination of inputs that minimizes cost. What would happen to this input combination if the price of labor increased? What

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

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