CHAPTER 8
SEQUENCE OF ACCOUNTS AND BALANCING ITEMS

8.01 The ESA records flows and stocks in an ordered set of accounts describing the economic cycle from the generation of income, through its distribution and redistribution and finally to its accumulation in the form of assets.

8.02 Each of the accounts shows transactions which balance out, either because of the definitions used or because a significant balance is carried forward to the next account.

8.03 The structured recording of transactions according to a logical analysis of economic life provides the aggregates required for the study of an industry, an institutional sector or sub-sector, or the total economy. The breakdown of the accounts was designed to reveal the most significant economic information.

8.04 The accounts are grouped in three categories:

1. current accounts;
2. accumulation accounts;
3. balance sheets.

Current accounts concern the generation, distribution and redistribution of income and its use in the form of final consumption. Finally, they permit the calculation of saving, which is an essential factor in accumulation.

Accumulation accounts analyse the various components of changes in the assets and liabilities of the various units and enable changes in net worth (the difference between assets and liabilities) to be recorded.

Balance sheets show the total assets and liabilities of the various units at the beginning and the end of the accounting period, together with their net worth. The flows for each asset and liability item recorded in the accumulation accounts are seen again in the changes in balance sheets account.

8.05 The sequence of accounts applies, wholly or partly, to institutional units, institutional sectors and sub-sectors, industries and the total economy.

8.06 The balancing items are established both gross and net. They are gross if calculated before deduction of consumption of fixed capital and net if calculated after this deduction. It is more significant to express income balancing items in net terms.

8.07 The accounts are presented in various ways:

1. in the form of integrated economic accounts, showing the accounts for all the institutional sectors, the total economy and the rest of the world in a single table (see paragraphs 8.83-8.87);
2. in the form of a sequence of accounts, giving more detailed information. The tables showing the presentation of each account are given in the section of this chapter entitled 'Sequence of accounts' (see paragraphs 8.09-8.82);
3. in the form of matrices, in which each account is represented by a row/column pair (see paragraphs 8.104-8.125).

8.08 Synoptic presentation of the accounts, balancing items and main aggregates:

Table 8.1 Synoptic presentation of the accounts, balancing items and main aggregates