| Variable | Definition | Formula | NA Codes |
|---|---|---|---|
| Gross Output (GO) | Gross Output is the value of all goods and services produced by an establishment during a specific period of time. | P.1 | |
| Intermediate Consumption (IC) | Intermediate consumption consists of the value of goods and services consumed as inputs in the process of production during a specific period of time. Excluded are fixed assets whose consumption is recorded as consumption of fixed capital (depreciation) | P.2 | |
| Value Added (VA) | Value added is the difference between the Gross Output and Intermediate Consumption during a specific period of time. Value added is a residual or balancing item: by definition, gross output equals intermediate consumption plus value added. | VA = GO – IC | B.1g = P.1-P.2 |
| Operating Surplus (OS) | Value added is the sum of compensation of employees, net indirect taxes (taxes minus subsidies), consumption of fixed capital and operating surplus (or mixed income for household enterprises). Operating surplus is a residual or balancing item. | OS = VA - (CE + NIT + Depreciation) | B.2g |
| Trade margins (TM) | The gross Trade Margin during a period is the value of sales of goods purchased for resale in the same condition as received minus the costs of those goods when purchased. As purchases are generally earlier than sales, the purchases during the period are adjusted for the inventories at the beginning and end of the period to match the goods sold. | TM = Resales – (purchases for resale + opening inventories – closing inventories) | TTM |
| Compensation of Employees (CE) | The Compensation of Employees includes the total salaries and wages paid or due to employees either in cash or in kind. It also includes the contribution of the establishment to the social security system plus any other cash or in-kind benefits paid or due to the employees. | D.1 | |
| Net Indirect Taxes on production (NIT) | The Net Indirect Taxes include all tax payments to the Government or the municipalities such as the sales tax, license fees including the license of vehicles, stamps and other fees paid after subtracting production subsidies provided by the Government. | NIT = IT – Subs | D.29 – D.31 |
| Consumption of Fixed Capital (Depreciation) | The value, at current replacement cost, of the reproducible fixed assets used up during a period of account as a result of normal wear and tear and foreseen obsolescence. Unforeseen obsolescence, damages caused by major catastrophes and the depletion of natural resources are not taken into account. | K.1 | |
| Gross Fixed Capital Formation (GFCF) | The value of new or newly imported durable goods purchased plus durable goods produced by the company on own account during a period, minus the value of (used) durable goods sold off during this period. | P.51 | |
| Changes in inventories | The increase in value of various types of goods during the accounting period. The inventories are typically classified as merchandise, supplies, materials, work in progress, and finished goods. | Closing inventories – Opening inventories | P.52 |
| Period | Definition |
|---|---|
| Year / annual | For flows. A period of 12 months, mostly from January to December, for which accounts are prepared. The SNA recommends that national accounts are prepared for the calendar year. The international accounting standards also recommend that business accounts are made up by calendar year for ease of comparison. |
| Quarter / quarterly | For flows. A period of three months, often aligned to calendar year quarters. Quarterly national accounts and quarterly statements required by business regulators are the most common uses of this period. |
| Month / monthly | For flows. In national accounts and economic statistics, monthly periods are used extensively in index systems such as price and production indices. In some countries, large corporations have to report (and publish) some information on a monthly basis. |
| Other periods | For flows. In countries not using the Gregorian calendar, other accounting periods may be used. |
| Beginning of the period | For inventories. The value (and quantity) of various types of goods at the beginning of the accounting period. |
| End of the period | For inventories. The value (and quantity) of various types of goods at the end of the accounting period. |
| Term | Definition |
|---|---|
| Producers’ prices | Producers’ prices are market prices as charged at farm or factory gate, exclusive of the cost of transport to the purchaser. |
| Purchasers’ prices | Purchasers’ prices are market prices including the cost of transport to the purchaser. |
| Basic prices | Basic prices are the producers’ prices less the taxes on the products and plus any subsidies on the products. The basic price excludes transport costs invoiced separately. |
| Factor costs | Factor costs is a valuation that reflects the costs associated with the use of the three primary factors of production: labour, land and capital. |
| Reconciliation between valuations | plus: Other taxes on production
minus: Other subsidies on production
equals: Value of gross output at basic prices
plus: Taxes on products (excluding any VAT or similar deductible taxes invoiced to the purchaser)
minus: Subsidies on products
equals: Value of gross output at producers’ prices
plus: Transport cost from seller to buyer
equals: Value of gross output at purchasers’ prices
|
| Term | Definition |
|---|---|
| Establishment | An establishment is the smallest production unit in the economic system. It is defined as a unit that produces one (or mainly one) product at a single location. |
| Enterprise | An enterprise is an independent legal unit. It may consist of one or more establishments. Business accounts are generally prepared at the level of the enterprise and not at the level of the individual establishment as various types of financial and other information is not available for each establishment. |
| Owner | The owners of an enterprise are the persons and/or institutions that established the enterprise, or bought (par of) it at a later date. Owners of household enterprises mostly also work in their enterprises, but without receiving fixed wages or salaries. Owners of incorporated enterprises often do not work in their enterprises but if they do, will become employees of their own companies. |
| Term | Definition |
|---|---|
| Revenue | Revenue is the total amount of money a business receives as a result of the sales of its goods and/or services, net of discounts given, over a certain period of time. The calculation excludes VAT and similar taxes. The terms Turnover and Income have similar meanings but are mostly used in different countries. |
| Cost of revenue | Cost of revenue refers to the total cost of manufacturing and delivering a product or service to consumers. It is designed to represent the direct costs associated with the goods and services the company provides. Often the term income is used instead of revenues. |
| Profit or loss | Profit or loss is defined as the total of income less expenses. (Revenue – Cost of revenue) |
| Accounting Method | Observation | Reconciliation |
|---|---|---|
| Gross Output and Revenue | In National Accounting, the gross output is the sum of the production of different goods and services by a company during the period while in business accounting revenue is recording the sales of these products and services during the same period. The difference between the two concepts is the treatment of the change in inventories of finished goods. For service industries there are basically no inventories of finished goods and therefore, Gross Output generally equals Revenue. | Gross Output minus the change in inventories of finished products equals Revenue for the period. |
| Valuation of inventories of finished goods | Inventories of finished products in business accounting are valued at the cost of production, that is, only including the cost of purchase, direct manufacturing costs and transport and excludes such items as marketing, research, selling and administrative expenses, etc. In practice, that means that inventories of finished goods often are valued at half their sales value or less. In national accounting, valuations should be at basic or producer prices, which both are substantially higher than the cost of production given in the company financial statements. In business accounts, inventories are required to be stated at the lower of cost (as described above) and net realisable value. | |
| Value added tax (VAT) and similar deductible taxes | Value added tax is not included in the value of output of an establishment in the national accounts nor in the revenue of an enterprise in the business accounts. |