Council Regulation (EC) No 2223/96 of 25 June 1996 on the European system of national and regional accounts in the Community

BALANCE SHEETS (IV) ([^E0103])

• 8.60. The aim of the balance sheets is to give a picture of the assets, liabilities and net worth of units at the start and end of the accounting period and of changes between balance sheets. The sequence is as follows:

• (a) opening balance sheet (IV.1);

• (b) changes in balance sheet (IV.2);

• (c) closing balance sheet (IV.3).

Opening balance sheet (IV.1)

• 8.61. The opening balance sheet records the value of assets and liabilities held by units at the start of the accounting period.

These items are categorized on the basis of the classification of assets and liabilities.

They are valued at prices current at the start of the accounting period.

The difference between assets and liabilities — the balancing item in the account — is the net worth at the start of the accounting period.

Changes in balance sheet (IV.2)

• 8.62. The changes in balance sheet account records changes in the value of assets and liabilities in the course of the accounting period and aggregates the amounts recorded in the various accumulation accounts, i. e. change in net worth due to saving and capital transfers, change in net worth due to other volume changes in assets and change in net worth due to nominal holding gains and losses.

Closing balance sheet (IV.3)

• 8.63. The closing balance sheet records the value of assets and liabilities held by units at the end of the accounting period. These items are categorised on the basis of the same classification used in the opening balance sheet and are valued at prices current at the end of the period.

The difference between assets and liabilities is the net worth at the end of the accounting period.

• 8.64. The value of an asset or liability in the closing balance sheets is equal to the sum of its value in the opening balance sheets and the amount recorded for the said item in the changes in balance sheet account.

REST OF THE WORLD ACCOUNTS (V)

• 8.65. The Rest of the World accounts record transactions between resident and non-resident units. The rest of the world does not constitute an institutional sector as such, but in the structure of the system it plays a similar role.

• 8.66. The sequence of Rest of the World accounts follows the same general pattern as the institutional sector accounts, i. e.:

• (a) current accounts,

• (b) accumulation accounts,

• (c) balance sheets.

• 8.67. These accounts are drawn up from the point of view of the rest of the world. Thus, what is a resource for the rest of the world is a use for the total economy and vice versa. By the same token, a financial asset held by the rest of the world is a liability for the total economy and vice versa (except monetary gold and special drawing rights).

Table 8.15 — Account IV: Balance sheets

CURRENT ACCOUNTS

External account of goods and services (V.I)

• 8.68. Imports of goods and services are recorded on the resources side of the account and exports of goods and services on the uses side. The difference between resources and uses is the balancing item in the account, called ‘external balance of goods and services’. If it is positive, there is a surplus for the rest of the world and a deficit for the total economy and vice versa if it is negative.

• 8.69. In order to be consistent with measures of the output of resident units, imports are valued at an equivalent of the basic price, i. e. net of import taxes but including import subsidies.

Imports of goods recorded in the external account of goods and services are valued fob, i. e. at the border of the country of export. Exports of goods are also valued fob.

When transport and insurance services included in the fob value of imports of goods (i. e. between the factory and the border of the country of export) are provided by resident units, they must be included in the value of exports of services by the economy importing the goods. Conversely, when transport and insurance services included in the fob value of exports of goods are provided by non-resident units they must be included in the value of imports of services by the economy exporting the goods.

External account of primary incomes and current transfers (V.II)

• 8.70. The purpose of the external account of primary incomes and current transfers is to determine the current external balance, which, in the structure of the system, corresponds to saving by the institutional sectors. This account is a condensed version of the sequence, for an institutional sector, extending from the allocation of primary income account to the use of income account.

• 8.71. On the resources side, the external account of primary incomes and current transfers shows the external balance of goods and services. It also records, on the resources or uses side, all distributive transactions which may involve the rest of the world, apart from capital transfers.

EXTERNAL ACCUMULATION ACCOUNTS (V.III)

Capital account (V.III.1)

• 8.72. The Rest of the World capital account records acquisitions less disposals of non-produced non-financial assets by non-resident units and measures the changes in net worth due to saving and capital transfers.

• 8.73. The balancing item of the capital account is the net lending or borrowing of the rest of the world. It is equal, but has the opposite sign, to the sum of the net lending or borrowing of the resident institutional sectors.

Financial account (V.III.2)

• 8.74. The layout of the Rest of the World financial account is identical to that of the institutional sectors' financial account.

Other changes in assets account (V.III.3)

• 8.75. As for the institutional sectors, the changes in net worth due to other changes in volume of assets and due to nominal holding gains and losses are determined successively, holding gains and losses themselves being broken down into neutral and real holding gains and losses.

• 8.76. The absence of produced assets in the accumulation accounts and balance sheets of the rest of the world is due to the convention whereby a notional institutional unit is created, the rest of the world being deemed to have acquired a financial asset — and vice versa for assets held in other economies by resident units.

BALANCE SHEETS (V.IV)

• 8.77. The balance sheets of the rest of the world contain financial assets and liabilities. On the assets side, they record the total acquisitions less disposals between non-resident and resident units of monetary gold and SDRs.

Table 8.16 — Full sequence of accounts for the rest of the world (external transactions account)

V.I:   external account of goods and services

V.II:   External account of primary incomes and current transfers

V.III:   Accumulation accounts

V.III.1:   Capital accounts

V.III.1.1:   Change in net worth due to saving and capital transfers account

V.III.1.2:   Acquisition of non-financial assets account

V.III.2:   Financial account

V.III.3:   Other changes in assets accounts

V.III.3.1:   Other changes in volume of assets account

V.III.3.2:   Revaluation account

V.III.3.2.1:   Neutral holding gains/losses account

V.III.3.2.2:   Real holding gains/losses account

V.IV:   External assets and liabilities account

V.IV.1:   Opening balance sheet

V.IV.2:   Changes in balance sheet

V.IV.3:   Closing balance sheet

GOODS AND SERVICES ACCOUNT (0)

• 8.78. The purpose of the goods and services account is to show, by product group and for the total economy, how the products available are used.

• 8.79. It therefore shows, by product group and for the total economy, the resources (output and imports) and the uses of goods and services (intermediate consumption, final consumption, gross fixed capital formation, changes in inventories, acquisitions less disposals of valuables, exports).

• 8.80. Given the way in which output is valued at basic prices and uses at purchaser's prices, taxes less subsidies on products must be included in the resources section.

• 8.81. Uses are recorded on the right-hand side of the goods and services account and resources on the left, i.e. on the opposite side from that used in the current accounts for the institutional sectors, since the product flows are the counterparts of the monetary flows.

• 8.82. The goods and services account is by definition in balance and therefore has no balancing item.

Table 8.17 — Account 0: Goods and services account

INTEGRATED ECONOMIC ACCOUNTS

• 8.83. The integrated economic accounts give a concise overview of the accounts of an economy: current accounts, accumulation accounts and balance sheets.

They bring together in the same table the accounts of all the institutional sectors, the total economy and the rest of the world, and balance all the flows and all the assets and liabilities. They also enable the aggregates to be read off directly.

• 8.84. In the table of integrated economic accounts, uses, assets and changes in assets are recorded on the left-hand side, while resources, liabilities, changes in liabilities and net worth are recorded on the right-hand side.

• 8.85. To make the table readable while giving a picture of the whole economic process, the levels of aggregation used are the highest compatible with an understanding of the structure of the system.

• 8.86. The columns in the table represent the institutional sectors, namely: non-financial corporations, financial corporations, general government, non-profit institutions serving households, and households. There are also a column for the total economy, a column for the rest of the world, and a column which balances uses and resources of goods and services.

• 8.87. The rows in the table represent the various categories of transactions, assets and liabilities, balancing items and certain aggregates.

Table 8.18 — Integrated economic accounts

CURRENT ACCOUNTS