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Production account

Production account. THE CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION. Production account. Definition of production ( ESA 2010 3.07 ):.

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Production account

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  1. Production account THE CONTRACTOR ISACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

  2. Production account

  3. Definition of production (ESA 2010 3.07): • Production is an activity carried by an institutional unit that uses inputs of labour, capital and goods and services to produce outputs of goods and services. • Production does not cover natural processes which have no human involvement or direction, such as the unmanaged growth of fish stocks in international waters, but production does include fish farming.

  4. Production includes (ESA 2101 3.08): • the production of all individual or collective goods and services that are supplied to units other than their producers; (b) the own-account production of all goods that are retained by their producers for their own final consumption or gross fixed capital formation.

  5. Production includes (ESA 2010 3.08): Own-account production of goods by households: (1) own-account construction of dwellings; (2) the production and storage of agricultural products; (3) the processing of agricultural products; (4) the production of other primary products, like mining salt, cutting peat and carrying water; (5) other kinds of processing, like weaving cloth, the production of pottery and making furniture.

  6. Measurement of production Production includes (ESA 2010 3.08): (c) the own-account production of dwelling services by owner/occupiers; (d) domestic and personal services produced by employing paid domestic staff; (e) volunteer activities that result in goods. Examples of such activities are the construction of a dwelling, church or other building. Volunteer activities that do not result in goods – e.g. care-taking and cleaning without payment – are excluded.

  7. Production definition (ESA 2010 3.08): • Production is not affected by the activity being illegal or not-registered at tax, social security, statistical and other public authorities. • Own-account production of goods by households is recorded when this type of production is significant, in relation to the total supply of that good in a country.

  8. Production excludes (ESA 2010 3.09): production of domestic and personal services consumed within the same household: • cleaning, decoration and maintenance; (b) cleaning, servicing and repair of household durables; (c) preparation and serving of meals;

  9. Market and non-market activities • Two different types of producers may be distinguished: • Market producers • Non-market producers • Different valuation principles of valuation should be applied for the two categories.

  10. Output Output (P.1) is the total value of products created during the accounting period: (a) market output (P.11); (b) output produced for own final use (P.12); (c) non-market output (P.13).

  11. Market and non-market activities Valuation of output (ESA 2010 3.42, 3.43) All output is to be valued at basic prices, but specific conventions hold for: (a) the valuation of non-market output; (b) the valuation of total output of a non-market producer (local KAU); (c) the valuation of the total output of an institutional unit of which a local KAU is a non-market producer.

  12. Measurement of production - housing Rented dwellings: output equals value of the rent Owner-occupied dwellings: - The owner-occupier is considered a producer of housing services. - Output is equal to the rent paid for a comparable rented house - Costs of repairs and decoration are - > intermediate consumption OR final consumption - major improvements > capital formation

  13. Measurement of production - trade Production = trade margin Trade margin = sales of goods purchased for resale less purchases of goods for resale plus change in inventories of goods for resale

  14. Market and non-market activities Valuationofoutput • Output for own final use is valued at the basic prices of similar products sold on the market. • The total output of a non-market producer is valued at the total costs of production, i.e. the sum of: (a) intermediate consumption; (b) compensation of employees; (c) consumption of fixed capital; (d) other taxes on production less other subsidies on production.

  15. Intermediate consumption (P.2) • Goods and services consumed as inputs by a process of production(ESA 2010 3.88) • Points of attention: • Delineation with fixed assets - small tools - intangible assets - military weapons • Delineation with value added - wages in kind - reimbursements • Products used for intermediate consumption are valued at purchaser’s prices

  16. Market and non-market activities Production account of a market producer

  17. Market and non-market activities Production account of a market producer

  18. Market and non-market activities Production account of a non-market producer

  19. Thank you for your attention CONTRACTOR IS ACTING UNDER A FRAMEWORK CONTRACT CONCLUDED WITH THE COMMISSION

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