Although the name national accounts suggests that these accounts focus on the total of a national economy, a more detailed picture of the economy can be given within the framework of national accounts.
The economic actors, the units, in the economy are grouped together to form institutional sectors. The main characteristic of institutional units is that they are able to engage in economic activities in their own right and that they can owe assets and incur liabilities. To be part of an economy, institutional units must have a permanent center of interest on the national territory of a country (see '3.2. Accounting Rules; 1 Residency').
Institutional units versus kind of activity units
Institutional units are often engaged in more than one kind of economic activity, and for the description of the production process it might be desirable to split them into more homogenous producing units; establishments and kind of activity units. Ideally, these units have one economic activity only, and are characterized by this activity. Furthermore, they need not have independence or complete bookkeeping system.
Establishments and kind of activity units are grouped togehter to form industries; agriculture, mining and manufacturing, services, etc.
The kind of activity units are grouped together to form industries for specific national accounts purposes, such as the compilation of supply/use and input/output tables, or for analyses of the process of production in general.
Institutional units are grouped togehter to form institutional sectors; government, financial corporations, non-financial corporations, households and non-profit institutions serving households.
The economy is split into institutional sectors for the purpose of compiling income and accumulation accounts as well as balance sheets
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