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National Accounting

National Accounting. Ch 2: The basic concepts of the National Accounting. Ch 2: The basic concepts of the National Accounting. The main concepts of the national accounting mostly resulted from the economic theory, and been affected by the economic concepts.

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National Accounting

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  1. National Accounting Dr. Amr Nazieh

  2. Ch 2: The basic concepts of the National Accounting Dr. Amr Nazieh

  3. Ch 2: The basic concepts of the National Accounting • The main concepts of the national accounting mostly resulted from the economic theory, and been affected by the economic concepts. • According to this, we are going in the coming paragraphs to display and explain those concepts of the national accounting Dr. Amr Nazieh

  4. Gross National Productions The ending value of goods and services produced within a given period and evaluated according to the market prices. Dr. Amr Nazieh

  5. Ch 2: The basic concepts of the National Accounting • These goods and services are valuable in view of three alternatives: (1) Direct consumption by people. (2) Storage and adding the value to the national wealth. (3) Exporting them to other foreign countries. Dr. Amr Nazieh

  6. Ch 2: The basic concepts of the National Accounting • According to the definition of the national accounting, some basic notes should be considered as:- (1) The measurement technique should focus mainly upon measuring the value instead of measuring the quantity of goods and services produced. Dr. Amr Nazieh

  7. Ch 2: The basic concepts of the National Accounting (2) Internal cash transfers, as; persons and other support schemes to the low income persons, should not be considered within the national production, as; they will not lead to a real increase in the national production . Dr. Amr Nazieh

  8. Ch 2: The basic concepts of the National Accounting (3) Some values should be added to the value of the national production, such as, the quantity of production reserved by the producer ( crops for instance ) for his personal usage, or the imputed wages by the personal owners who do some jobs without receiving wages. All these values should be add to the measurement of the national production. Dr. Amr Nazieh

  9. Ch 2: The basic concepts of the National Accounting (4) The value of the secondhand products should be excluded from the value of the national production. (5) Share and bonds traded in the board of exchange should not have any effect upon national production, this is because they do not represent a final products. Dr. Amr Nazieh

  10. Ch 2: The basic concepts of the National Accounting (6) In cases of putting shares and bonds for sales to obtain an additional new source of finance, then these transactions should be considered within the national production as, they will lead to increase production. Dr. Amr Nazieh

  11. Ch 2: The basic concepts of the National Accounting (7) In order to achieve a real comparison between the different years in ease of national production, real values rather than cash values which should be considered . This result appeared to face and detect the continuous reduction in the purchasing power of money. Dr. Amr Nazieh

  12. Ch 2: The basic concepts of the National Accounting • In order to achieve a correct comparison between the different periods with regard to the value of the national production measured in cash, a price index, which help in exculpating the effect of prices charges between the different years Dr. Amr Nazieh

  13. Ch 2: The basic concepts of the National Accounting • The price index of any year= Prices of the Comparable Year Prices of the basis year Dr. Amr Nazieh

  14. Ch 2: The basic concepts of the National Accounting • Example :- • Suppose that the following are the prices of a certain national product during the previous 10 years: Dr. Amr Nazieh

  15. Ch 2: The basic concepts of the National Accounting • Suppose also that quantities of production during these years were amounted to : Dr. Amr Nazieh

  16. Ch 2: The basic concepts of the National Accounting • Required : • 1- Prepare the price index to the previous commodity, using the price of 1994 as a basis year. • 2-Determine the real value of the national production. Dr. Amr Nazieh

  17. Ch 2: The basic concepts of the National Accounting • Solution : • With regard to year 1994 as a basis year. Then, it should be considered equals to 100%. According to this., the index prices of the following years, will be counted as follows: Dr. Amr Nazieh

  18. Ch 2: The basic concepts of the National Accounting • Solution : • With regard to year 1994 as a basis year. Then, it should be considered equals to 100%. According to this., the index prices of the following years, will be counted as follows: Dr. Amr Nazieh

  19. Ch 2: The basic concepts of the National Accounting • Year 1995 = (1.8 ÷ 1.5) × 100 = 120%. • Year 1996 = (2 ÷ 1.5) × 100 = 133%. • Year 1997 = (1.9 ÷ 1.5) × 100 = 127%. • And then the index prices of the different years will appear in the following table: Dr. Amr Nazieh

  20. Ch 2: The basic concepts of the National Accounting • From the price index table one can set the real values of production during the given period as follows: Dr. Amr Nazieh

  21. Ch 2: The basic concepts of the National Accounting • From pervious table one can reach the real values of the national production after the exclusion of the price change effects Dr. Amr Nazieh

  22. Ch 2: The basic concepts of the National Accounting • Alternative concepts of the national production : • It was appeared different concepts to explain the meaning of the national production, according to the differences of the economic themes of the different countries as well as the objectives of preparing the national accounts of each. Dr. Amr Nazieh

  23. Ch 2: The basic concepts of the National Accounting • Accordingly, three alternative concepts appeared as follows : 1- Gross National production : • It considers what was yield from an economy during a specific period . • It considers all produced production either tangible or intangible, which satisfies the needs of individuals. Dr. Amr Nazieh

  24. Ch 2: The basic concepts of the National Accounting • The main characteristics of the gross production, includes : (1) It includes what is valuable for people, during a specific period of time. (2) It excludes all available natural resources to the society, in addition to any foreign financial support and subsidiary. Dr. Amr Nazieh

  25. Ch 2: The basic concepts of the National Accounting • (3)It includes all commodities produced, therefore, it does not exclude the amount of commodities consumed by the producer of that commodities. Dr. Amr Nazieh

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