BRIEF METHODOLOGICAL
- PRODICTION ACCOUNT reflects direct production results (product and services output) and use (intermediate consumption) of product and services during the production.
In this account the value added is defined, which is the basis for calculating of the gross domestic product, a main aggregate of the development of the economy. - PRODUCT AND SERVICES GROSS OUTPUT characterizes the volume of product and services as a result of production activity of economic units-residents during the considered period. According to the accepted conception of the borders of production activity in SNA the product and services output reflects the followings:
- product and services forwarded to units without producer;
- product produced for harvest or own final consumption, including product belonging to the resources of financial turnover means of producer;
- some services produced for own final consumption.
There are two types of output of goods and services: market and non-market.
Following product and services are included in market output:
а) realized by economically advantageous prices by sale or barter way;
b) paid for employees in kind as wage;
c) forwarded to the sections (the sections in independent balance or considered as separate record unit) of the same enterprises for use in production during the same or the next period (for example, grain and fodder produced and used in agriculture enterprise; food products supplied for canteens belonged to enterprise, child enterprises, child enterprises, rest homes and etc., by subsidiary farms.
The followings are included in non-market output:
а) product and services produced by institutional units for their own final consumption or accumulation of fixed assets (for example, agricultural and other products produced in private subsidiary farms, construction realized by farm method, services provided by housemaids receiving the salary and etc.);
b) services for other institutional units without payment or at low prices, including collective services for publicity in general (for example, free education and medical services, state management, defence services and etc).
It is recommended to estimate the market output of product and services by main prices, or if it is not possible, by producer's prices. - INTERMEDIATE CONSUMPTION is the value of product (excluding fixed assets) and market services used for the purpose of product or services production during the definite period. It also includes financial expenditures, money paid for non-financial services, travel allowances (including trip and hotel expenses).
It is recommended to estimate intermediate consumption by producer prices (excluding trade-transport added and subsidies for product) that combine taxes (excluding value added tax) on product during production process of product and services. - GROSS VALUE ADDED is calculated at the level of the economy branches as the difference between output of goods and services and intermediate consumption. It is recommended to identify gross value added of the sections in basic prices, but if it is not possible – in producer's prices.
- IMPORT AND PRODUCTION TAXES include taxes on product and other taxes on production.
Taxes on products are usually taxes got on units of product or service, i.e. quantity of product and services produced, sold or imported by residents, or taxes got in proportion to the value. They include more widespread below indicated taxes:
- value added tax (VAT);
- excises, sales tax and etc;
- taxes on separate types of services (taxes on transport, communication services, insurance taxes, advertisement, entertainment, games and lotteries, sport events and etc. taxes);
- profit of the state enterprises for which rights for monopoly were given by the law for the purpose to increase income of the government (profit of fiscal monopolists);
- import and export taxes, custom duties.
All taxes except for product for which enterprises and organizations should pay as a result of their participation in the production refer to other taxes on production. These taxes do not include taxes on enterprise profit or other incomes and they are paid for the state budget regardless of the productivity. They include:
- taxes from wage or labour force;
- land, building, installation taxes;
- entrepreneurial professional licences;
- taxes for use of fixed assets;
- taxes for financial and capital operations;
- taxes for environmental pollution;
- taxes for international operations and etc. - SUBSIDIES FOR PRODUCTION AND IMPORT are current unrequited payments by the state budget regarding to enterprises' production activity. It also includes investment type subsidies (grants) defined for financing of accumulation of fixed assets referred to capital tranfers.
Subsidies for product are usually subsidies paid in propoprtion to quantity or value of product or services produced, sold or imported by the residents. It includes export and import subsidies, regular payments from the state budget for permanent damages as a result of fixing of sale price of products produced by the enterprises for lower than average production expenditures and etc.
Other subsidies for production include their following main types:
- subsidies for wage fund or labour force;
- related subsidies using production factors, for example subsidies for stimulation of use of definite raw material, energy and etc. types;
- subsidies for decreasing of environmental pollution, for example subsidies for payment of the value of additional treatment of industrial wastes. - GROSS DOMESTIC PRODUCT (GDP)is one of the most important indicators of the system of national accounts. It characterizes the final result of production activity of economic units-residents in the field of both material production and intangible services; and it is measured by the volume of value added originated by these units on production of product and services for final consumption.
GDP could be also determined by amount of primary incomes shared between economic units-residents and product and services' producers, i.e. wage of employees, net taxes for production and import, in other words - by income method.
Use (expenditure method) of gross domestic product combines final consumption of product and services, gross accumulation of fixed assets, change of means of material turnover reserves, net purchase of valuables (wealth) and export and import balance.
During the reporting period as compared with the previous period for calculation of volume index GDP it is necessary to divide the quantity of GDP during the reporting period at prices of the previous period by the quantity of GDP at current prices during the previous period. - FINAL CONSUMPTION EXPENDITURES consist of expenditures of households-residents for consumer goods and services, as well as expenditures of general government and non-profit institutions serving for households for individual and collective consumption of goods and services. Such grouping shows which sector pays for final consumption. Households' final consumption expenditures are defined by size of actual spending for consumer goods and services purchased at the expense of their incomes. Final consumption expenditures of general government and non-profit institutions serving for households are defined by size of their current expenses (including use of fixed assets). Goods and services for private consumption are provided by health, social security, education, culture and art, budget organizations, as well as non-profit institutions serving for households. Collective services are provided by law-enforcement, administrative, defence, science and etc. budget organizations.
- FINAL CONSUMPTION EXPENDITURES OF HOUSEHOLDS include expenditures for purchasing of consumer goods and services from all trade enterprises, city markets and through non-organized trade (street vendors), public service enterprises, passenger transport, communication, hotels, paid commercial institutions of culture, health care, education, as well as purchasing of goods and services in kind, produced for own use (agricultural production of personal subsidiary plots, imputed services of owner-occupied dwellings), and received as labor remuneration.
- GENERAL GOVERNMENT FINAL CONSUMPTION EXPENDITURES ON INDIVIDUAL GOODS AND SERVICES consist of expenditures of government institutions on consumer goods and services intended for personal consumption. Such expenditures are funded from the State budget and/or extra-budget funds.
- GENERAL GOVERNMENT FINAL CONSUMPTION EXPENDITURES ON COLLECTIVE SERVICES include expenditures on services rendered by the enterprises and organizations which meet needs not of the separate households but of a whole community or its groups and are compensated from the State budget. This indicator includes expenditures on defence, general government, science and its services (non-market), renovation and lighting of streets, services of institutions serving agriculture.
- FINAL CONSUMPTION EXPENDITURES OF NON-PROFIT INSTITUTIONS SERVING FOR HOUSEHOLDS are expenditures of public organizations on consumer goods and services provided free to households. Services provided free by enterprises and organizations to their employees in education, health care and culture are also included here.
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GROSS FIXED CAPITAL FORMATION is defined as investments in fixed assets objects aimed on new income generation in future for using them in the process of production. Fixed assets are assets that are multiply used and the result of production. They include expenditures on buildings and installations, machinery and equipments, means of transport, pedigree productive and plough cattle, gardens, vineyards and other sown lands, geological exploration works, expenses on software for computer and databases, originals of literary and art works (for circulation of the base films, recordings, manuscripts and etc).
Gross fixed capital formation consists of the following components:
available fixed assets and purchasing of new fixed assets, including amortization;
b) expenditures on improvement of non-produced financial assets;
c) expenses related to confer a right of ownership on non-produced assets to others.
Acquisition of assets includes purchases, barter, in kind purchasing of capital transfers, production for own use, basic repair.
Amortization of assets is indicated by (-). Improvement of non-produced financial assets include expenditures on improvemend of land, its natural resources and other natural assets and preparation (melioration, drying and etc., development and widening of mine, forest areas, plantations, gardens and other agricultural areas) of them for use. Expenses related to confer a right of ownership on non-produced assets to others include value of services provided by lawyers, real estate agents and other mediators, duties, commission taxes, taxes and etc. Structure of gross fixed capital formation is estimated as follows: a) by purchasing price (buyers' price) of fixed capital, i.e. including all expenditures on confer a right of ownership to others; b) by main prices during production of fixed capital for own use or by expenditures for production. - CHANGES IN INVENTORIES comprise changes in productive stocks of semi-finished and finished products, and products for resale. Change of the value of inventories is defined by the difference between the value of inventories entered in and removed from the stock. In this case time of product receipt or removal is defined by the used market prices. However, in practice it is difficult to find information on all products' receipt and removal during the reporting period, therefore change of stocks is usually calculated as difference between value of stocks for the end and beginning of the period based on enterprise's accounting reports. In this case, it is necessary to exclude change of product (holding profit) resulted by change of prices during the time of product in stock.
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REVALUATION AT COMPARABLE PRICES (əvvəlki ilə nisbətən) həm istehsаl оlunmuş ÜDM kimi, həm də оnun istifаdəsi göstəriciləri üzrə аpаrılır. ÜDM istehsаlı göstəricilərin müqаyisəli qiymətlərlə yenidən qiymətləndirilməsi ikiqаt deflyasiya üsulunun istifаdəsi ilə həyаtа keçirilir. Bu zаmаn müqаyisəli qiymətlərlə əlаvə dəyərin həcmi müqаyisəli qiymətlərlə qiymətləndirilmiş burахılışın və аrаlıq istehlаkın аrаsındаkı fərq kimi аlınır. Müqаyisəli qiymətlərlə bürахılış və аrаlıq istehlаkın yenidən qiymətləndirilməsi iki üsul ilə həyаtа keçirilə bilər:
- deflation by corresponding price indices;
- extrapolation of data at current prices for the base year by volume indices and physical indicators.
To reevaluate the indicators of use of GDP at compared prices the relevant price indices (consumer price index, capital investment price index, etc.) and physical indicators are applied.
GDP deflator index is the ratio of GDP at current prices compared to GDP at compared prices of the previous period. As opposed to price index of goods and services the GDP deflator characterizes change of labour payment, operating surplus (including mixed income) and consumption of fixed capital resulting from the change in prices as well as nominal volume of net taxes. - In spite of the financial source, the ACTUAL FINAL CONSUMPTION reflects value of all goods and services purchased by households-residents for private consumption as well as value of the all collective services provided by institutions of public administration. Concerning with households, the Actual Final Consumption combines selling expenditures of consumer goods and services and value of free of charge private goods and services provided by institutions of public administration and non-commercial organization in in-kind form as social transfers. The Actual Final Consumption for public administration is equal to value of collective services; non – commercial organizations that provide households with services has not Actual Final Consumption. The indicators on Actual Final Consumption and Final Consumption Expenditures on whole economy the same.
