Th is chapter and the following three chapters are con-
cerned with the stock position and fl ows of assets and
liabilities. Th is chapter defi nes assets, liabilities, and net
worth, and describes their classifi cation and the various
balance sheet memorandum items.

Introduction.

7.1 A balance sheet is a statement of the values of
the stock positions of assets owned and of the liabilities
owed by an institutional unit or group of units, drawn
up in respect of a particular point in time.^1 A balance
sheet is typically compiled at the end of each report-
ing period, which is also the beginning of the next re-
porting period. In a macroeconomic statistics balance
sheet, a distinction is made between nonfi nancial as-
sets, fi nancial assets, liabilities, and net worth. Th e net
worth of an institutional unit (or grouping of units)
is the total value of its assets minus the total value of
its liabilities. As for all other balance sheet items, net
worth can also be viewed as a stock position resulting
from the transactions and other economic fl ows of all
previous periods. A highly abbreviated version of a
balance sheet is shown in Table 7.1.^2

7.2 Th e existence of a set of balance sheets inte-
grated with the fl ows enables analysts to take a com-
prehensive view when monitoring and assessing
economic and fi nancial conditions and the behavior
of public sector units. Balance sheet information on
fi nancial assets held by, and liabilities owed to, other
entities supports the analysis of the fi nancial risks
and vulnerabilities of the general government or
public sector. Similarly, with regard to claims and li-

(^1) A balance sheet can be compiled for an individual unit or any
collection of units, such as the general government or public sec-
tor, or their subsectors. It is oft en convenient to describe a balance
sheet in reference to a single institutional unit, but any such state-
ment applies equally to the balance sheet of a sector or subsector.
(^2) Table 4.4 shows a presentation of a balance sheet that displays
the same information presented in an alternative format.
abilities on nonresidents, balance sheets support the
assessment of the general government’s share in the
external debtor and creditor position of a country.
For public corporations, balance sheets permit the
computation of widely used fi nancial ratios, while
data on the stock position of fi xed assets are useful
in studies of their investment behavior and needs for
fi nancing.
7.3 Th is chapter fi rst defi nes assets and liabilities
in general and the two major types of assets, fi nan-
cial and nonfi nancial assets. Th e following section
describes the principles used to value assets and lia-
bilities. Th e chapter then describes the detailed classi-
fi cation of assets and liabilities and the types of assets
and liabilities included in each category of the clas-
sifi cation. Th e fi nal sections describe net worth, rec-
ommended memorandum items, and a supplemental
cross-classifi cation of fi nancial assets or liabilities by
sector of the counterparty.

Defi ning Assets and Liabilities.

7.4 Th is section describes economic and legal own-

ership of an asset, as well as the asset boundary used

in GFS and other macroeconomic statistics. Th ese

concepts are then used to defi ne liabilities, fi nancial

assets, and nonfi nancial assets.

Ownership and the Asset Boundary

7.5 Two types of ownership can be distinguished

in macroeconomic statistics: legal ownership and eco-

nomic ownership (see paragraphs 3.38–3.41). Legal

and economic ownership are usually the same but dif-

fer in a few cases (e.g., fi nancial leases discussed in

paragraph 7.158).

• Th e legal owner of resources, such as goods
  and services, natural resources, fi nancial assets,
  and liabilities, is the institutional unit entitled by
  law and sustainable under the law to claim the

The Balance Sheet

7