Sokol Vako United Nations Statistics Division
Description: Sokol Vako United Nations Statistics Division Training for the worldwide implementation of the System of Environmental Economic Accounting 2012 - Central Framework for Latin America and the Caribbean 7-10 July 2015, Santiago, Chile
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slide1. Sokol Vako
United Nations Statistics Division
Training for the worldwide implementation of the System of Environmental Economic Accounting 2012 - Central Framework for Latin America and the Caribbean
7-10 July 2015, Santiago, Chile Introduction to Core Accounting Principles on SEEA and SNA<br>
slide2. Objectives of the Session Introduce and recall some fundamentals of national accounting
Define the scope of measurement
Defining the economy and the environment
The production boundary
Economic units – sectors and industries
Demonstrate the breadth of national accounting and the recording of stocks and flows
SNA and SEEA as frameworks for organizing information<br>
slide3. Defining the Economy<br>
slide4. Defining the “Economy” Economic activities
Production, Consumption, Accumulation
Economic products
Goods and services
Economic assets
Produced, Non-produced, Financial assets
Economic units
Establishments, enterprises, households, governments
Economic territory
Residence, geographic coverage<br>
slide5. Constituents of an Economy? All institutional units residing in the economic territory of a country during the accounting period constitute its economy. Domestic Economy Institutional unit: an entity capable of owning assets, incurring liabilities, carrying out economic activities taking decisions on all aspects of economic life and engaging in transactions with other entities. Economic Territory: The geographic territory administered by the government of the country within which persons, goods, and capital can circulate freely. The economic territory in which an institutional unit has its centre of predominant economic interest [2008 SNA] is the residence of the unit.<br>
slide6. 6 Residence<br>
slide7. Institutional Sectors Domestic Economy These are legal entities recognized by law. Includes quasi-corporate, which are not a legal entity. This sector includes all resident household units (which are not legal entities) and all the unincorporated enterprises (not classified as corporation or quasi corporation) owned by them.<br>
slide8. Enterprises, Establishments and Industries Enterprises
Institutional units from the perspective of being producers of goods and services
Establishments
Enterprises in a single location performing a single or predominant type of productive activity
Industries
Groupings of establishments undertaking similar types of productive activity<br>
slide9. The Production Boundary “Production is an activity carried out … by an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services” (2008 SNA, 6.24)
In practice:
Exclude things you do only for yourself
Exclude household production of services for itself
Except rent of owner-occupiers & wages of domestic staff
Include household production of goods for itself
Agricultural products, fishing, fuelwood, clothes, furniture, water, energy
Include concealed and illegal activity<br>
slide10. Product Flows in the SEEA<br>
slide11. Types of Output and Production Market output
Transactions between economic units at market prices
Non-market output
Not transacted at market prices (government education, health)
Valued at cost of production
Own-account production in SNA (within establishments)
For own final consumption (e.g. subsistence agriculture) : INCLUDED
For own final capital formation (e.g. building own house) : INCLUDED
For own intermediate consumption : EXCLUDED (except ancillary activity)<br>
slide12. Own accounting production – recording in SNA and SEEA SNA
recording is limited to the production of goods for own use
i.e. exclude own intermediate consumption
SEEA
Record all own account and intra-establishment production and use of goods and services
i.e. include own intermediate consumption
Example
Production of energy through the incineration of waste by an establishment for own intermediate consumption is recorded in SEEA but not in SNA<br>
slide13. Key Messages Many aspects to defining the economy
Measurement boundaries are important to understand
Production boundary key determinant of the size of GDP
Own- account activity needs special consideration
Economic (institutional) units can be seen from two key perspectives
Institutional sector: Similar economic behaviours / legal basis
Industry: Similar productive activities<br>
slide14. Defining Environmental Assets<br>
slide15. Discussion: What “Things” Might be Considered Environmental Assets?<br>
slide16. Definition of Environmental Assets “Environmental assets are the naturally occurring living and non-living components of the Earth, together constituting the bio-physical environment, which may provide benefits to humanity”
2012 SEEA Central Framework 2.17<br>
slide17. One Environment : Two Perspectives Individual environmental assets / resources Ecosystems Timber
Water
Soil
Fish Forests
Lakes
Agricultural areas<br>
slide18. Scope of Individual Resources<br>
slide19. Physical and Monetary Scope In principle, when accounting for environmental assets in physical terms include all environmental assets whether or not they have a monetary value
All land in a country is included in physical land accounts
Also timber resources, other biological resources, soil, inland water resources
Mineral and energy resources scope is known deposits
Aquatic resources scope is all resources within EEZ plus rights on high seas
In practice limit to commercial stocks and subsistence<br>
slide20. Key Points and Boundary Issues Distinct treatment of land
Account for its provision of space / area not the resources that are within it
Include natural and cultivated biological resources
Oceans and atmosphere excluded
Stocks of potential energy from renewable sources excluded
E.g. solar, wind, tidal power
Slight exception for hydropower<br>
slide21. Ecosystem Assets Areas comprising combinations of individual resources (timber, soil, water, etc) but also having ecological processes and characteristics
Aim to assess
Condition of the ecosystem within an area (i.e. how is it functioning, quality of processes)
Flow of ecosystem services to economic and human activity
Ecosystem asset accounting measures environmental impact rather than environmental pressures<br>
slide22. Economic and Environmental Assets<br>
slide23. Key Messages Environmental assets can be seen from two perspectives: individual resources & ecosystems
Both natural and cultivated resources are included in scope
Scope is generally broader in physical terms than in monetary terms
Land is accounted for in terms of area/space<br>
slide24. The Structure of Accounts<br>
slide25. System of Environmental-Economic Accounts (SEEA) view<br>
slide26. Supply and Use Tables
Matrices that record how supplies of different kinds of goods and services originate from domestic industries and imports and how those supplies are allocated between various intermediate or final uses, including exports
Involve the compilation of a set of integrated production and generation of income accounts for industries by drawing upon detailed data from industrial censuses or surveys
Provide an accounting framework within which the product flow method of compiling national accounts, whereby the total supplies and uses of individual types of goods and services have to be balanced with each other, can be systematically exploited<br>
slide27. Accounting and balancing identities Supply and use identity
Within the economy, the amount of a product supplied must also be used with the economy, most likely by a range of different economic units, or exported
Total supply of natural inputs = Total use of natural inputs
Total supply of products = Total use of products
Total supply of residuals = Total use of residuals
Input-output identity
Over an accounting period, flows of materials into an economy must equal the flows of materials out of an economy plus any net additions to stock in the economy<br>
slide28. Basic Supply and Use Table, monetary terms<br>
slide29. Supply table – show the flows relating to the production, generation, and supply of natural inputs, products and residuals by different economic units by different economic units or the environment Use table – show the flows relating to the consumption and use of nature inputs, products and residual by different economic units or the environment<br>
slide30. Connections between SUT and asset accounts<br>
slide31. Key Messages All economic stocks and flows can be organized and placed in context
National accounting is not only output and intermediate consumption
One account is not sufficient – different questions require a focus on different accounts and balancing items
The accounting system is complete and internally consistent<br>
slide32. The SEEA Central Framework Accounts Flow accounts: supply and use tables for products, natural inputs and residuals (e.g. waste, wastewater) generated by economic activities.
physical (e.g. m2 of water) and/or monetary values (e.g. permits to access water, cost of wastewater treatment, etc.)
Stock accounts for environmental assets: natural resources and land
physical (e.g. fish stocks and changes in stocks) and/or monetary values (e.g. value of natural capital, depletion)
Activity / purpose accounts that explicitly identify environmental transactions already existing in the SNA.
e.g. Environmental Protection Expenditure (EPE) accounts, environmental taxes and subsidies
Combined physical and monetary accounts that bring together physical and monetary information for derivation indicators, including depletion adjusted aggregates<br>
slide33. Physical flows accounts CF = Central Framework, white cover edition, refers to paragraph number<br>
slide34. Asset accounts<br>
slide35. Monetary flows accounts<br>
slide36. THANK YOU<br>
slide37. Discussion: What economic and environmental information would be useful to organize?<br>
slide38. Main Benefits of an Accounting Approach Integrates measures of stocks and flows, supply and use
Comprehensive and internally consistent within defined measurement boundaries
Measurement and attribution of change over time
Enables comparison between countries because it measures agreed concepts<br>
slide39. System of National Accounts as integrating framework Policy makers and other stakeholders require a consistent and coherent understanding of the underlying drivers of economic growth, including:
Growth in capital accumulation
Changes in employment
Labour and capital productivity
Linkages between macroeconomic policies and industrial and sectoral policies<br>
slide40. System of National Accounts as integrating framework This implies the need for consistent and coherent data to
Monitor progress
Evaluate whether or not goals are being achieved
To achieve this, a statistical framework that can organize, integrate and reconcile data is needed
The statistical framework needs to provide data of sufficient scope, detail, quality and timeliness<br>
slide41. System of National Accounts as integrating framework The System of National Accounts (SNA) ensures economic statistics are conceptually consistent with economic theory
Ensures consistency of concepts, definitions and classifications used in different but related fields of statistics
Serves as accounting framework to ensure numerical consistency of data from various sources
Consequently, the SNA provides an overarching integrating framework for macroeconomic statistics to facilitate economic analysis and policy formulation
Latest version: 2008 SNA<br>
slide42. System of National Accounts as integrating framework 42<br>
slide43. Supply and use identity Total Supply of Products
= Domestic production + Imports
Is identical to
Total Use of Productions
= Intermediate consumption
+ Household final consumption
+ Gross capital formation
+ Exports<br>
slide44. Input-output identity Materials into the economy = Natural inputs + Imports + Residuals received from the rest of the world + Residuals recovered from the environment
is equal to
Materials out of the economy = Residual flows to the environment + Exports + Residuals sent to the rest of the world
plus
Net additions to stock in the economy = Gross capital formation + Accumulation in controlled landfill sites - Residuals from produced assets and controlled landfill sites<br>
slide45. Developments in the SNA and the SEEA<br>
slide46. Key Developments in 2008 SNA Clarifications on definition of units and sectors
Developments in the measurement of financial services including FISIM allocation, central bank output and non-life insurance
Capitalization of research and development
Capitalization of computer software extended to include databases and copies (of originals)
Water resources included on balance sheet (in some circumstances)
Treatment of goods for processing and merchanting aligned with BPM
Improvements in treatments for financial assets and liabilities<br>
slide47. Key Developments in 2012 SEEA Central Framework from SEEA-2003 Coverage and style
Inclusion of agreed treatments rather than options for accounting
Removal of examples => SEEA Applications and Extensions
Discussion of environmental degradation => SEEA Experimental Ecosystem Accounting<br>
slide48. 2012 SEEA Developments (cont) Measurement of physical flows
Clarification on natural inputs and residual flow boundaries
Treatment of landfill sites
Natural resource residuals
Cultivated biological resources
Inputs of energy from renewable sources
Definition for solid waste
Design of Physical supply and use tables<br>
slide49. 2012 SEEA Developments (cont) Environmental activities and related transactions
Environmental activities limited to environmental protection and resource management – now excludes resource use activities
Development of Classification of Environmental Activities (CEA)
Definition of the Environmental Goods and Services Sector (EGSS) and relevant statistics – previously discussion on the environment industry<br>
slide50. 2012 SEEA Developments (cont) Accounting for environmental assets
Definition of environmental assets now introduced aligned with descriptions in SEEA-2003
Complementary perspectives of individual resources and ecosystems rather than overlap
Change to the price used for the measurement of flows of natural resources in monetary terms
Determinations in the accounting approach to the measurement of individual resources
Depletion as a deduction from income
Discoveries not a consequence of a production process
Depletion of renewables calculated net of natural growth
Interim classifications for land use and land cover
Introduction of discussion on soil resources<br>
slide51. Key Messages 2012 SEEA and SEEA-2003 different but in broad terms quite aligned conceptually
2012 SEEA Central Framework and 2008 SNA aligned
Standards will always develop over time to reflect
New conceptual developments and accounting treatments
Experience in compilation
Developments in the economy and our understanding of nature<br>
slide52. Conceptual elements of 2008 SNA Institutional unit
Capable of owning goods and assets, incurring liabilities and engaging in economic activities and transactions with other units in its own right
2 main kinds
Households
Legal entities
Types of transactions
Current
Capital
Financial<br>
slide53. Rules of accounting Time of recording
Transactions between institutional units have to be recorded when claims and obligations arise, are transformed or are cancelled
This time of recording is called an accrual basis
Implies that there is a change in economic ownership
Accrual basis is preferred to other forms of recording:
Cash basis
Due for payment basis
Commitments basis<br>
slide54. Rules of accounting Valuation
Transactions are valued at the actual price agreed upon by transactors
Market prices are thus the basic reference for valuation
If market prices are unavailable, valuation is made
According to costs incurred (compensation of employees, intermediate consumption, taxes less subsidies on production, cost of capital) or
By reference to market prices for analogous goods and services<br>
United Nations Statistics Division
Training for the worldwide implementation of the System of Environmental Economic Accounting 2012 - Central Framework for Latin America and the Caribbean
7-10 July 2015, Santiago, Chile Introduction to Core Accounting Principles on SEEA and SNA<br>
slide2. Objectives of the Session Introduce and recall some fundamentals of national accounting
Define the scope of measurement
Defining the economy and the environment
The production boundary
Economic units – sectors and industries
Demonstrate the breadth of national accounting and the recording of stocks and flows
SNA and SEEA as frameworks for organizing information<br>
slide3. Defining the Economy<br>
slide4. Defining the “Economy” Economic activities
Production, Consumption, Accumulation
Economic products
Goods and services
Economic assets
Produced, Non-produced, Financial assets
Economic units
Establishments, enterprises, households, governments
Economic territory
Residence, geographic coverage<br>
slide5. Constituents of an Economy? All institutional units residing in the economic territory of a country during the accounting period constitute its economy. Domestic Economy Institutional unit: an entity capable of owning assets, incurring liabilities, carrying out economic activities taking decisions on all aspects of economic life and engaging in transactions with other entities. Economic Territory: The geographic territory administered by the government of the country within which persons, goods, and capital can circulate freely. The economic territory in which an institutional unit has its centre of predominant economic interest [2008 SNA] is the residence of the unit.<br>
slide6. 6 Residence<br>
slide7. Institutional Sectors Domestic Economy These are legal entities recognized by law. Includes quasi-corporate, which are not a legal entity. This sector includes all resident household units (which are not legal entities) and all the unincorporated enterprises (not classified as corporation or quasi corporation) owned by them.<br>
slide8. Enterprises, Establishments and Industries Enterprises
Institutional units from the perspective of being producers of goods and services
Establishments
Enterprises in a single location performing a single or predominant type of productive activity
Industries
Groupings of establishments undertaking similar types of productive activity<br>
slide9. The Production Boundary “Production is an activity carried out … by an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services” (2008 SNA, 6.24)
In practice:
Exclude things you do only for yourself
Exclude household production of services for itself
Except rent of owner-occupiers & wages of domestic staff
Include household production of goods for itself
Agricultural products, fishing, fuelwood, clothes, furniture, water, energy
Include concealed and illegal activity<br>
slide10. Product Flows in the SEEA<br>
slide11. Types of Output and Production Market output
Transactions between economic units at market prices
Non-market output
Not transacted at market prices (government education, health)
Valued at cost of production
Own-account production in SNA (within establishments)
For own final consumption (e.g. subsistence agriculture) : INCLUDED
For own final capital formation (e.g. building own house) : INCLUDED
For own intermediate consumption : EXCLUDED (except ancillary activity)<br>
slide12. Own accounting production – recording in SNA and SEEA SNA
recording is limited to the production of goods for own use
i.e. exclude own intermediate consumption
SEEA
Record all own account and intra-establishment production and use of goods and services
i.e. include own intermediate consumption
Example
Production of energy through the incineration of waste by an establishment for own intermediate consumption is recorded in SEEA but not in SNA<br>
slide13. Key Messages Many aspects to defining the economy
Measurement boundaries are important to understand
Production boundary key determinant of the size of GDP
Own- account activity needs special consideration
Economic (institutional) units can be seen from two key perspectives
Institutional sector: Similar economic behaviours / legal basis
Industry: Similar productive activities<br>
slide14. Defining Environmental Assets<br>
slide15. Discussion: What “Things” Might be Considered Environmental Assets?<br>
slide16. Definition of Environmental Assets “Environmental assets are the naturally occurring living and non-living components of the Earth, together constituting the bio-physical environment, which may provide benefits to humanity”
2012 SEEA Central Framework 2.17<br>
slide17. One Environment : Two Perspectives Individual environmental assets / resources Ecosystems Timber
Water
Soil
Fish Forests
Lakes
Agricultural areas<br>
slide18. Scope of Individual Resources<br>
slide19. Physical and Monetary Scope In principle, when accounting for environmental assets in physical terms include all environmental assets whether or not they have a monetary value
All land in a country is included in physical land accounts
Also timber resources, other biological resources, soil, inland water resources
Mineral and energy resources scope is known deposits
Aquatic resources scope is all resources within EEZ plus rights on high seas
In practice limit to commercial stocks and subsistence<br>
slide20. Key Points and Boundary Issues Distinct treatment of land
Account for its provision of space / area not the resources that are within it
Include natural and cultivated biological resources
Oceans and atmosphere excluded
Stocks of potential energy from renewable sources excluded
E.g. solar, wind, tidal power
Slight exception for hydropower<br>
slide21. Ecosystem Assets Areas comprising combinations of individual resources (timber, soil, water, etc) but also having ecological processes and characteristics
Aim to assess
Condition of the ecosystem within an area (i.e. how is it functioning, quality of processes)
Flow of ecosystem services to economic and human activity
Ecosystem asset accounting measures environmental impact rather than environmental pressures<br>
slide22. Economic and Environmental Assets<br>
slide23. Key Messages Environmental assets can be seen from two perspectives: individual resources & ecosystems
Both natural and cultivated resources are included in scope
Scope is generally broader in physical terms than in monetary terms
Land is accounted for in terms of area/space<br>
slide24. The Structure of Accounts<br>
slide25. System of Environmental-Economic Accounts (SEEA) view<br>
slide26. Supply and Use Tables
Matrices that record how supplies of different kinds of goods and services originate from domestic industries and imports and how those supplies are allocated between various intermediate or final uses, including exports
Involve the compilation of a set of integrated production and generation of income accounts for industries by drawing upon detailed data from industrial censuses or surveys
Provide an accounting framework within which the product flow method of compiling national accounts, whereby the total supplies and uses of individual types of goods and services have to be balanced with each other, can be systematically exploited<br>
slide27. Accounting and balancing identities Supply and use identity
Within the economy, the amount of a product supplied must also be used with the economy, most likely by a range of different economic units, or exported
Total supply of natural inputs = Total use of natural inputs
Total supply of products = Total use of products
Total supply of residuals = Total use of residuals
Input-output identity
Over an accounting period, flows of materials into an economy must equal the flows of materials out of an economy plus any net additions to stock in the economy<br>
slide28. Basic Supply and Use Table, monetary terms<br>
slide29. Supply table – show the flows relating to the production, generation, and supply of natural inputs, products and residuals by different economic units by different economic units or the environment Use table – show the flows relating to the consumption and use of nature inputs, products and residual by different economic units or the environment<br>
slide30. Connections between SUT and asset accounts<br>
slide31. Key Messages All economic stocks and flows can be organized and placed in context
National accounting is not only output and intermediate consumption
One account is not sufficient – different questions require a focus on different accounts and balancing items
The accounting system is complete and internally consistent<br>
slide32. The SEEA Central Framework Accounts Flow accounts: supply and use tables for products, natural inputs and residuals (e.g. waste, wastewater) generated by economic activities.
physical (e.g. m2 of water) and/or monetary values (e.g. permits to access water, cost of wastewater treatment, etc.)
Stock accounts for environmental assets: natural resources and land
physical (e.g. fish stocks and changes in stocks) and/or monetary values (e.g. value of natural capital, depletion)
Activity / purpose accounts that explicitly identify environmental transactions already existing in the SNA.
e.g. Environmental Protection Expenditure (EPE) accounts, environmental taxes and subsidies
Combined physical and monetary accounts that bring together physical and monetary information for derivation indicators, including depletion adjusted aggregates<br>
slide33. Physical flows accounts CF = Central Framework, white cover edition, refers to paragraph number<br>
slide34. Asset accounts<br>
slide35. Monetary flows accounts<br>
slide36. THANK YOU<br>
slide37. Discussion: What economic and environmental information would be useful to organize?<br>
slide38. Main Benefits of an Accounting Approach Integrates measures of stocks and flows, supply and use
Comprehensive and internally consistent within defined measurement boundaries
Measurement and attribution of change over time
Enables comparison between countries because it measures agreed concepts<br>
slide39. System of National Accounts as integrating framework Policy makers and other stakeholders require a consistent and coherent understanding of the underlying drivers of economic growth, including:
Growth in capital accumulation
Changes in employment
Labour and capital productivity
Linkages between macroeconomic policies and industrial and sectoral policies<br>
slide40. System of National Accounts as integrating framework This implies the need for consistent and coherent data to
Monitor progress
Evaluate whether or not goals are being achieved
To achieve this, a statistical framework that can organize, integrate and reconcile data is needed
The statistical framework needs to provide data of sufficient scope, detail, quality and timeliness<br>
slide41. System of National Accounts as integrating framework The System of National Accounts (SNA) ensures economic statistics are conceptually consistent with economic theory
Ensures consistency of concepts, definitions and classifications used in different but related fields of statistics
Serves as accounting framework to ensure numerical consistency of data from various sources
Consequently, the SNA provides an overarching integrating framework for macroeconomic statistics to facilitate economic analysis and policy formulation
Latest version: 2008 SNA<br>
slide42. System of National Accounts as integrating framework 42<br>
slide43. Supply and use identity Total Supply of Products
= Domestic production + Imports
Is identical to
Total Use of Productions
= Intermediate consumption
+ Household final consumption
+ Gross capital formation
+ Exports<br>
slide44. Input-output identity Materials into the economy = Natural inputs + Imports + Residuals received from the rest of the world + Residuals recovered from the environment
is equal to
Materials out of the economy = Residual flows to the environment + Exports + Residuals sent to the rest of the world
plus
Net additions to stock in the economy = Gross capital formation + Accumulation in controlled landfill sites - Residuals from produced assets and controlled landfill sites<br>
slide45. Developments in the SNA and the SEEA<br>
slide46. Key Developments in 2008 SNA Clarifications on definition of units and sectors
Developments in the measurement of financial services including FISIM allocation, central bank output and non-life insurance
Capitalization of research and development
Capitalization of computer software extended to include databases and copies (of originals)
Water resources included on balance sheet (in some circumstances)
Treatment of goods for processing and merchanting aligned with BPM
Improvements in treatments for financial assets and liabilities<br>
slide47. Key Developments in 2012 SEEA Central Framework from SEEA-2003 Coverage and style
Inclusion of agreed treatments rather than options for accounting
Removal of examples => SEEA Applications and Extensions
Discussion of environmental degradation => SEEA Experimental Ecosystem Accounting<br>
slide48. 2012 SEEA Developments (cont) Measurement of physical flows
Clarification on natural inputs and residual flow boundaries
Treatment of landfill sites
Natural resource residuals
Cultivated biological resources
Inputs of energy from renewable sources
Definition for solid waste
Design of Physical supply and use tables<br>
slide49. 2012 SEEA Developments (cont) Environmental activities and related transactions
Environmental activities limited to environmental protection and resource management – now excludes resource use activities
Development of Classification of Environmental Activities (CEA)
Definition of the Environmental Goods and Services Sector (EGSS) and relevant statistics – previously discussion on the environment industry<br>
slide50. 2012 SEEA Developments (cont) Accounting for environmental assets
Definition of environmental assets now introduced aligned with descriptions in SEEA-2003
Complementary perspectives of individual resources and ecosystems rather than overlap
Change to the price used for the measurement of flows of natural resources in monetary terms
Determinations in the accounting approach to the measurement of individual resources
Depletion as a deduction from income
Discoveries not a consequence of a production process
Depletion of renewables calculated net of natural growth
Interim classifications for land use and land cover
Introduction of discussion on soil resources<br>
slide51. Key Messages 2012 SEEA and SEEA-2003 different but in broad terms quite aligned conceptually
2012 SEEA Central Framework and 2008 SNA aligned
Standards will always develop over time to reflect
New conceptual developments and accounting treatments
Experience in compilation
Developments in the economy and our understanding of nature<br>
slide52. Conceptual elements of 2008 SNA Institutional unit
Capable of owning goods and assets, incurring liabilities and engaging in economic activities and transactions with other units in its own right
2 main kinds
Households
Legal entities
Types of transactions
Current
Capital
Financial<br>
slide53. Rules of accounting Time of recording
Transactions between institutional units have to be recorded when claims and obligations arise, are transformed or are cancelled
This time of recording is called an accrual basis
Implies that there is a change in economic ownership
Accrual basis is preferred to other forms of recording:
Cash basis
Due for payment basis
Commitments basis<br>
slide54. Rules of accounting Valuation
Transactions are valued at the actual price agreed upon by transactors
Market prices are thus the basic reference for valuation
If market prices are unavailable, valuation is made
According to costs incurred (compensation of employees, intermediate consumption, taxes less subsidies on production, cost of capital) or
By reference to market prices for analogous goods and services<br>