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sale; it has costs and revenues. Thus, in social accounting all transactors are treated in a similar way ("as if" they were a business). The accounts can be criticised for being eclectic in some ways, but that is not necessarily a problem; the aim of the exercise is to identify and categorise all flows, and the user can then reaggregate them in different ways.
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in different ways, from an accounting point of view. Sometimes, it will not be altogether clear which category a flow of expenditure belongs to exactly, it may not "fit" exactly into a category, or, it is technically impossible to separate out different flows in financial data, in such a way that is
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In other words, we cannot relate, group and aggregate prices in different ways without making some value-based assumptions that enable valid comparisons. Without those value assumptions, the aggregates themselves would be meaningless. Thus, when economists focus on market-prices, value assumptions
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We might be able to identify an expenditure quite easily, yet this expenditure may not tally with the corresponding income that should exist, insofar as we can identify it (or vice versa). In that case, we have to make some assumptions or imputations based on what we do know, or can observe. Yet,
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The implicit assumption made in national accounts, is that the account at the macro-level must be similar to that at the micro-level. Economic relations are regarded as broadly the same at the micro-level and the macro-level. An individual business buys and uses up inputs and produces outputs for
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Statisticians may not be able to keep track of fixed equipment or durables when they are resold by a business to another business after use, locally or overseas. So, the same asset can be counted twice or more. In principle, expenditure on used assets is excluded from capital formation, but in
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In the case of a small individual business or having such utility, it is unlikely that an expenditure of funds, an input or output, or an income from production will be counted twice. If it happens, that's usually just bad accounting (a math error), or else a case of fraud.
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value-added, simply because imported foreign products are resold locally, at inflated prices, without any corresponding additional local production occurring. This may not necessarily create problems of double counting locally, but if we want to estimate
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Another reason has to do with the complexities of trade, in particular trade in services and international trade. Not only can it be difficult to correctly identify, survey and allocate particular financial incomes and expenditures, but also
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the incomes and outlays of all units, within a system of transactors. Lacking such a system, we would end up double counting incomes and expenditures of interacting units, exaggerating the quantity of value-added or investments.
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But things are more complicated when we aggregate the accounts of many enterprises, households and government agencies ("institutional units" or transactors in social accounting language). Here, a conceptual problem arises.
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of a country, for example, the cost of goods and services used up is deducted from gross revenue, all flows are valued uniformly, and flows which fall outside the production boundary are excluded.
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Once the principles of the value theory are established, categories and counting units can be exactly and logically defined, as a basis for mathematical operations to aggregate the
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required by the social accounting system. This may mean that a flow is, in part or as a whole, inadvertently counted twice, because of difficulties with the data sources.
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occur, creating problems of how to value goods and services as such. At the highest level, due to the expansion of foreign trade, a fraction of
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of incomes and expenditures. All flows can then be allocated to their appropriate category, without counting the same flow several times.
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it also refers to a conceptual problem in social accounting practice, when the attempt is made to estimate the new value added by
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Utz-Peter Reich, National
Accounts and Economic Value. A Study in Concepts. New York: Palgrave Macmillan, 2001, p. 11.
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governing economic exchange, often fixed by law. Thus, for example, it is argued that no new value can result from a
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is nowadays strongly influenced by the valuation principles of ordinary business accounts and the prevailing
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are always in the back of their mind, even if they are not aware of that, and regard value theory as
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transfer of funds, i.e. where funds are provided without anything being provided in return.
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is an error whereby a transaction is counted more than once, for whatever reason. But in
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eliminates double counting, double counting may technically still occur to some extent.
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The first and most obvious reason is that, in actual accounting practice,
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The system of gross and netting actually used, is ultimately based on a
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328:Francois Lequiller & Derek Blades,
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239:In fact, the value theory applied in
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