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5216.0 - Australian National Accounts: Concepts, Sources and Methods, 2000  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 15/11/2000   
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Contents >> Chapter 8: The accounting framework


8.1 The system of national accounts is described in SNA93 (paragraph 1.1) as a:

        "coherent, consistent, and integrated set of macroeconomic accounts, balance sheets and tables based on internationally agreed concepts, definitions, classifications and accounting rules".

8.2 The accounts are designed to be implemented at different levels of aggregation, from the level of individual institutional units, through groupings of institutional units into institutional sectors and subsectors, to the level of the national economy as a whole. The system is built around a sequence of interconnected flow accounts, each of which records a particular form of economic activity. The flow accounts follow a sequence of economic processes, from production, through generation of income, to the use of income in the form of final consumption or capital accumulation. Economic wealth generated by the processes is recorded in the system's balance sheets.

8.3 An important feature of the flow accounts is that they are a double entry system and, therefore, are fully balanced. Every entry has a counterpart entry i.e. every outgoing reappears elsewhere as an incoming, reflecting the circularity of the economic process. Materials and the services of factors of production flow into productive enterprises, and final goods and services flow into consumption, capital formation and changes in inventories. These flows of goods and services are matched by reverse flows of money. Producers pay for their materials, and also pay out factor income which (after borrowing and lending transactions and transfers such as income taxes, and borrowing and lending transactions) flows back as payments from final purchasers.

8.4 Although SNA93 employs a clearly defined sequence of accounts, the authors point out (SNA93 paragraph 1.4) that the activities recorded in the accounts should not be interpreted as necessarily taking place sequentially. For example, incomes are generated continuously by production processes, while expenditures on the outputs produced may be taking place more or less simultaneously. An economy is a general equilibrium system, with simultaneous occurrences of interdependent economic activities involving countless transactions between different institutional units. Feedbacks are continually taking place from one type of economic activity to another.

8.5 The ASNA is based on similar principles to those described in SNA93. However, the presentation of accounts in the ASNA is modified somewhat to reflect the present state of development of national accounting in Australia and to provide national accounts estimates in a way that is considered most meaningful for Australian users.

8.6 In this chapter, a broad outline of the ASNA accounting framework is given, followed by a description of each of the accounts that make up the ASNA. The definitions of items presented in the accounts in this chapter are provided in Chapter 4 and are not repeated here. Following this is a description of the relationships among key aggregates. The chapter concludes with a short discussion of the differences between the presentations of accounts in the ASNA and SNA93.

The ASNA accounting framework

8.7 The types of accounts in the ASNA reflect the major economic processes occurring in the economy, namely production, the distribution of incomes, consumption, saving and investment, financial flows and asset accumulation. The ASNA is composed of the following types of accounts:

      • production accounts;
      • income accounts;
      • capital accounts;
      • financial accounts; and
      • balance sheets, supported by changes in balance sheet accounts.

8.8 Each of these accounts is produced for the economy as a whole, and the set of accounts together constitutes the consolidated summary accounts. In addition, income accounts, capital accounts, financial accounts and balance sheets are constructed for each of the four domestic institutional sectors i.e. non-financial corporations, financial corporations, households (including non-profit institutions serving households) and general government. The national accounts also include a number of supplementary tables which provide more detailed presentations of the individual sector accounts. Although, in principle, production accounts could be constructed for the four individual institutional sectors, major interest centres instead around production on an industry basis. This cuts across the institutional type of sectoring used in the income and capital accounts since the classification of production units by industry in such a presentation is done without regard to institutional sector.

8.9 Another group of accounts that is an integral part of the national accounts is the external accounts. These accounts record the transactions and financial positions of the nation with the rest of the world, from the point of view of the rest of the world. In one sense, the external accounts are simply another set of sectoral accounts. However, because of the important role of the external sector, these accounts are a major focus of attention from economic analysts and international organisations in their own right.

Production accounts

8.10 Production accounts record the expenses incurred in production and the receipts from sales of goods and services during a particular period. Sales of goods and services (including goods and services produced for own use) are recorded on the credit side of the account. On the debit side, expenses of production, namely intermediate consumption, compensation of employees, taxes less subsidies on production and imports, gross operating surplus and gross mixed income, are recorded. The gross domestic product account is, in effect, a consolidation of the trading accounts of all producer units.

8.11 As shown in table 8.1, the receipts side of the gross domestic product account in the ASNA shows sales of goods and services to final users (including exports less imports) and changes in inventories. Because only sales to final users are shown, revenue from the sale of intermediate goods and services (i.e. goods and services used up in the production of final output) does not appear. In the process of consolidation of the production accounts of all sectors, intermediate goods and services cancel out, as the revenue of one producer is a cost to another. On the payments side the incomes from production are shown, namely compensation of employees, gross operating surplus, gross mixed income and net taxes on production and imports.


Final consumption expenditureCompensation of employees
Gross fixed capital formationGross operating surplus
Domestic final demandGross mixed income
Changes in inventoriesTotal factor income
Gross national expenditureTaxes less subsidies on production and imports
Exports of goods and servicesStatistical discrepancy (I)
less Imports of goods and services
Statistical discrepancy (E)
Gross domestic productGross domestic product

Statistical discrepancies in the production accounts

8.12 There are three approaches which can be used to measure GDP:

      • the income approach (I), which involves summing net factor incomes, consumption of fixed capital (depreciation) and taxes less subsidies on production and imports;
      • the expenditure approach (E), which involves summing all final expenditures, changes in inventories and exports less imports of goods and services; and
      • the production approach (P), which involves taking the value of goods and services produced by an industry (i.e. output) and deducting the cost of goods and services used up by the industry in the production process (i.e. intermediate consumption) and adding the result across all domestic industries. To this is added taxes less subsidies on products if output is valued at basic prices, as recommended in SNA93.

8.13 While each measure should, conceptually, deliver the same estimate of GDP, if the three measures are compiled independently using different data sources then different estimates of GDP result. However, the Australian national accounts estimates have been integrated with annual balanced supply and use tables. These tables have been compiled from 1994-95 up to the year preceding the latest completed financial year. As integration with balanced supply and use tables ensures that the same estimate of GDP is obtained from the three approaches, annual estimates using the I, E and P approaches are identical for the years for which these tables are available.

8.14 Prior to 1994-95, the estimates using each approach are based on independent sources, and there are usually differences between the I, E and P estimates. Nevertheless, for these periods, a single estimate of GDP has been compiled by taking a simple average of the I, E and P estimates. In chain volume terms, GDP is derived using the expenditure and production approaches. See also "The compilation of chain volume estimates of GDP" in Chapter 10.

8.15 As a result of the above methods:
      • there are no statistical discrepancies for annual estimates from 1994-95 up to the year prior to the latest year, in either current price or chain volume terms; and
      • for years prior to 1994-95, for the latest year, and for all quarters, statistical discrepancies exist between estimates based on the I, E and P approaches and the single estimate of GDP, in both current price and chain volume terms. These discrepancies are shown in the relevant tables.

Income accounts

8.16 The national income account (table 8.2) records sources and use of income. On the sources of income side it shows compensation of employees, gross operating surplus, gross mixed income (from unincorporated enterprises) and taxes less subsidies on production and imports. Net secondary income from non-residents is added to derive gross national disposable income. The use of income (or disbursements) side of the account shows how gross disposable income is used for final consumption expenditure and the consumption of fixed capital (depreciation), with the balance being the nation's net saving. Saving is carried forward into the capital account. Saving must be used to acquire financial or non-financial assets of one kind or another, including cash, the most liquid of financial assets, or to reduce liabilities. When saving is negative, the excess of consumption over disposable income must be financed by disposing of assets or incurring liabilities.


Compensation of employeesFinal consumption expenditure
Gross operating surplusConsumption of fixed capital
Gross mixed incomeNet saving
Taxes less subsidies on production and imports
Net primary income from non residents
Gross national income
Net secondary income from non-residents
Gross disposable incomeGross disposable income

8.17 The sectoral income accounts are disaggregations of the national income account, and record for each institutional sector its net income arising both from production and from transfers from other sectors, and its uses of income (disbursements). The difference between income and use of income is net saving (the balancing item). Income accounts are also compiled for selected subsectors. As consumption of fixed capital is not calculated for subsectors, the balancing item in the subsector accounts is equal to net saving plus consumption of fixed capital (i.e. gross saving).

8.18 For corporations (both financial and non-financial), the income accounts show income arising from gross operating surplus from the gross domestic product account and property income (such as interest, dividends, reinvested earnings on direct foreign investment and rent on natural assets) from other sectors. Total income is used to make various payments (such as interest, dividends, reinvested earnings on direct foreign investment and rent on natural assets) to other sectors. The balance is the saving of the respective sectors and is transferred to their capital accounts.

8.19 The income account of the households sector shows compensation of employees, gross mixed income (on account of unincorporated enterprises) and gross operating surplus on dwellings owned by persons, which are all from the gross domestic product account, as well as property income (interest, dividends, property income attributed to insurance policyholders and rent on natural assets) from other sectors, social assistance benefits and various other forms of secondary income. On the use of income side are shown final consumption expenditure, consumer debt interest and other property income payable, income taxes and other current taxes payable, other current transfers to non-residents and other sectors, consumption of fixed capital (on account of unincorporated enterprises and dwellings owned by persons) and net saving (the balancing item).

8.20 The general government income account shows receipts from income taxes, other taxes on income, wealth, etc., taxes on production and imports, property income (interest, dividends and rent on natural assets) and gross operating surplus. On the use of income side are shown final consumption expenditure, property income payable to other sectors, subsidies, social assistance benefits and other current transfers, consumption of fixed capital and net saving (the balancing item).

Adjusted disposable income accounts

8.21 In the core income accounts, social transfers in kind are shown as part of government final consumption expenditure. However, for some analyses it is useful to show the value of these transfers as part of household, rather than government, final consumption expenditure. To support these analyses supplementary accounts - called adjusted disposable income accounts - are provided for the general government and households sectors. In these accounts, social transfers in kind are shown as a secondary income transfer from the general government sector to the households sector - hence the term adjusted disposable income - with corresponding adjustments to the final consumption expenditures of the two sectors.

Capital accounts

8.22 The national capital account (table 8.3) shows sources of funds (receipts) for financing gross capital formation and the use of these funds (disbursements). Sources of funds comprise consumption of fixed capital, net saving transferred from the national income account and net capital transfers receivable from non-residents. On the disbursements side are shown gross fixed capital formation, changes in inventories and net acquisitions of non-produced non-financial assets. Conceptually, net lending to non-residents is the balance of the national income account. However, if there are statistical discrepancies in the gross domestic product account, then these discrepancies must also be taken into account before the derivation of the balancing item. If net lending is negative, then the economy is a net borrower from non-residents.


Net savingGross fixed capital formation
Consumption of fixed capital Changes in inventories
Net capital transfers receivable from non-residentsAcquisitions less disposals of non-produced non-financial assets
Acquisitions less disposals of valuables
Statistical discrepancy (E) less statistical discrepancy (I)
Net lending to non-residents
Gross saving and capital transfersTotal capital accumulation and net lending

8.23 Table 8.3 has an entry for acquisitions less disposals of valuables. While conceptually such transactions should be recorded in the capital account, they are currently not recorded in the ASNA due to a lack of a suitable data source.

8.24 Similar information to that provided in the national capital account is provided in the sectoral capital accounts. The balancing item, net lending, reflects the net lending of a particular sector to all other sectors. As sectoral production accounts are not compiled, it is not possible to show any national statistical discrepancies by sector. Accordingly, the sectoral net lending balance includes, implicitly, each sector's share of the national statistical discrepancy. Capital accounts are also compiled for selected subsectors.

Financial accounts

8.25 The financial accounts record the net acquisition of financial assets and the net incurrence of liabilities. The financial account for each sector shows the financial transactions associated with the net lending transactions recorded in the capital account. The balance in each financial account is net change in financial position, which is equal to net acquisition of financial assets less net incurrence of liabilities. Conceptually, this balance is the same as net lending derived from the relevant capital account. However, due to measurement imperfections, this is seldom the case in practice and a net errors and omissions item is included to achieve balance.

8.26 In the national financial account (table 8.4), transactions in financial assets and liabilities with non-residents are shown. The national financial account is identical to the financial account in the balance of payments. Financial accounts are also compiled for each sector and for a wide range of subsectors. In these financial accounts, the transactions relate to financial assets and liabilities with other sectors/subsectors.


Net acquisition of financial assets with rest of the worldNet incurrence of liabilities with rest of the world
Net errors and omissions
Net lending
Changes in financial assetsChanges in liabilities and net worth

Balance sheet and related accounts

8.27 The national balance sheet (table 8.5) shows, at particular points in time, the aggregate value of Australian residents' non-financial assets, their financial claims on non-residents, and their liabilities to non-residents. The difference is net worth. Similar information is shown for each sector in the sectoral balance sheets. For financial assets and liabilities, the amounts shown are the outstanding claims on and liabilities to other sectors on the balance sheet dates. For non-financial assets, the amounts shown represent each sector's share of the Australian value as at the balance sheet dates.


Non-financial assetsLiabilities to the rest of the world
Produced assetsNet worth
Fixed assets
Non-produced assets
Financial assets with the rest of the world
Total assetsTotal liabilities and net worth

8.28 The assets shown in the table above include entries for valuables and intangible non-produced assets. While conceptually these assets should be recorded in the balance sheets, they are currently not recorded in the ASNA balance sheets due to a lack of suitable data sources.

Changes in balance sheets accounts

8.29 Supplementing the balance sheets are accounts that show the changes in balance sheet positions during a particular period. In these accounts, changes in balance sheets are decomposed into transactions (which are equivalent to the relevant transactions recorded in the capital and financial accounts), revaluations due to the effect of price changes, and other changes affecting the volume of assets and liabilities.

External accounts

8.30 The external accounts show the economy's transactions and stock positions with non-residents, from the non-residents' perspective.

8.31 In the ASNA, external income, capital, financial and balance sheet accounts are provided. The external income account is analogous to the balance of payments current account. As such, its balance - balance on external current account - is the same as, but with opposite sign to, the balance on current account recorded in the balance of payments. The balance on the external account - net lending - is the same as, but with opposite sign to, the sum of the current and capital account balances in the balance of payments. The external financial account includes the balance of payments financial account together with net lending of non-residents (the sum of the balance of payments current and capital accounts) and the difference between the two, i.e. the balance of payments net errors and omissions item.

Relationships among key aggregates

8.32 Table 8.6 shows the relationships among the key national accounting aggregates. For the sake of exposition, it is assumed that there are no statistical discrepancies (including net errors and omissions).

GDP (Gross Domestic Product)
C + G + I + X - M
    From table 8.1, we know that GDP
        • equals final consumption expenditures by households (C) and government (G)
        • plus investment in fixed capital and inventories (I)
        • plus exports less imports of goods and services (X - M)
CoE + GOS + GMI + NT
    From table 8.1 we know that GDP
        • equals compensation of employees (CoE)
        • plus gross operating surplus (GOS) and gross mixed income (GMI)
        • plus taxes less subsidies on production and imports (NT)
GNDY (Gross National Disposable Income)
CoE + GOS + GMI + NT + NPI + NSI
    From table 8.2 we know that gross national disposable income (GNDY)
        • equals the income components of GDP (i.e. CoE, GOS, GMI, NT)
        • plus net primary income receivable from non-residents (NPI)
        • plus net secondary income receivable from non-residents (NSI)
    For CoE + GOS + GMI + NT in equation 3, we substitute GDP from equation 2
C + G + I + X - M + NPI + NSI
    For GDP in equation 4, we substitute C + G + I + X - M from equation 1
CAB (Current Account Balance)
X - M + NPI + NSI
    From the balance of payments we know that the current account balance
        • equals exports less imports of goods and services (X - M)
        • plus net primary income receivable from non-residents (NPI)
        • plus net secondary income (current transfers) receivable from non-residents (NSI)
C + G + I + CAB
    Same as equation 5, but with CAB replacing X - M + NPI + NSI (see equation 6)
GS (Gross Saving)
    Gross saving (GS) is defined to equal net saving (NS) + consumption of fixed capital (CoFC)
GNDY - C - G
    From table 8.2 we know that gross saving (GS)
        • equals GNDY
        • minus household and government final consumption expenditure (C + G)
    From equations 7 and 9 we know that GS = C + G + I + CAB - C - G, and C and G cancel out.
GS - I
    The terms in equation 10 have been rearranged
Net lending (NL)
    From table 8.3 we know that net lending (NL)
        • equals gross saving (GS) plus net capital transfers from non-residents (NCT)
        • minus investment in fixed assets and inventories (I)
        • minus net acquisitions of non-produced non-financial assets (NPNFA)
          Note: Conceptually, net acquisitions of valuables should also be subtracted, but these transactions are currently not recorded in the ASNA
    Same as equation 12, but with CAB replacing GS - I (from equation 11)
    From table 8.4 we know that net lending (NL) equals the net acquisition of financial assets with non-residents (NFA) less the net incurrence of liabilities to non-residents (NLN)

8.33 In the table above, it should be noted that gross saving (GS) reflects the saving of all the domestic sectors of the economy, and not just the households sector's saving.

Differences between the ASNA and SNA93 presentation of accounts

8.34 There are some differences in the presentation of accounts in the ASNA and SNA93. These are:

      • the ASNA GDP account is a combination of the SNA93 production account and generation of income account; and
      • the ASNA income accounts are a combination of the SNA93 allocation of primary income, secondary distribution of income, and use of income accounts.

8.35 There are also minor differences in the way information is presented within the accounts and in the level of detail shown.

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