Introduction to Framework of National Accounts (SNA)

The system of national accounts are build around a sequence of interconnected flow accounts linked to different types of economic activity, and integrated with these flow accounts are the balance sheets showing the stocks of assets and liabilities at the beginning and the end of the accounting period.

The flow accounts relates to the production, the generation, the distribution, redistribution and use of income, as well as to the accumulation of capital and financial assets. Each account is balanced by introducing a balancing item defined residually as the difference between resources and uses recorded in the accounts. The balancing item from the one account is carried forward as a resource in the next account, thereby making the sequence of accounts an articulated whole. E.g., In the production account is value added defined as the balancing item between production (resource) and intermediate consumption (use), and then carried forward as a resource in the next account, the generation of income account. The balancing items encapsulate the net result of the activities covered by the accounts, and are therefor economic constructs of considerable interest, e.g., value added, disposable income and savings.

The balance sheets are integrated with the flow accounts, since the stocks recorded in the closing balance sheet is determined by the stocks recorded in the opening balance sheet, the transactions recorded in the accumulation accounts and the other changes recorded in the other changes in assets account.