Economic Flows, Stock Positions, and Accounting Rules 61
manageable and analytically useful way. For example,
tax revenue is the sum of all fl ows that are classifi ed
as taxes, and data for social security funds are the ag-
gregations of the data for all institutional units in the
economy that are classifi ed as social security funds.
Aggregates and classifi cations are closely linked in that
classifi cations are designed to produce the aggregates
thought to be most useful. Conceptually, the value for
each aggregate is the sum of the values for all items in
the relevant category. However, estimates of some ag-
gregates may be needed due to defi ciencies in source
data, such as missing information on individual trans-
actions, other economic fl ows, and asset and liability
positions that may be incomplete or even nonexistent.
3.142 Balancing items are economic constructs
obtained by subtracting one aggregate from a second
aggregate. For example, the net operating balance is
obtained by subtracting the total expense aggregate
from the total revenue aggregate. Net worth is the bal-
ancing item equal to total assets minus total liabilities
(see Chapter 4).
Netting of Flows and Stock Positions.
3.143 It is feasible to present many categories of
fl ows and stock positions on a gross or net basis. An
item presented on a net basis is calculated as the sum
of one set of fl ows or stock positions minus the sum
of a second set of a similar kind. For example, total
tax revenue could be presented on a gross basis as the
total amount of all taxes accrued, or on a net basis
as the gross amount minus tax refunds. Similarly,
interest can be presented on a gross basis as interest
revenue and interest expense, respectively, while it is
feasible to calculate the net interest. Th e choice de-
pends on the category of fl ows or stock positions, the
nature of the items that might be subtracted to obtain
the net value, and the analytic utility of the gross and
net values. Th e choices for gross and net presentations
as used in the GFS framework are discussed in para-
graphs 3.144–3.151.
3.144 In GFS, revenue categories are presented
gross of expense categories for the same or related
category and likewise for expense categories. In par-
ticular, interest revenue and interest expense are pre-
sented gross rather than as net interest expense or net
interest revenue. Similarly, social benefi ts and social
contributions, grant revenue and expense, and rent
revenue and expense are presented gross. Also, sales
of goods and services are presented gross of the ex-
penses incurred in their production.3.145 In the case of the correction of erroneous or
unauthorized transactions, revenue categories are pre-
sented net of refunds of the relevant revenue, and ex-
pense categories are presented net of infl ows from the
recovery of the expense. For example, refunds of income
taxes may be paid when the amount of taxes withheld
or otherwise paid in advance of the fi nal determination
exceeds the actual tax due. Such refunds are recorded
as a reduction in tax revenue. Similarly, if social benefi ts
that were paid in error are recovered, then such recov-
eries are recorded as a reduction in expense.3.146 Acquisitions and disposals of nonfi nancial
assets other than inventories are presented gross. For
example, acquisitions of land are presented separately
from disposals of land. For analytic presentations, the
net acquisition of each category of nonfi nancial asset
may be preferable and can be derived easily.3.147 Netting is implicit in the presentation of
some specifi c transactions categories in GFS—for ex-
ample, changes in inventories. Changes in each type
of inventories are presented net rather than tracking
daily additions and withdrawals. Th at is, the change
in materials and supplies is presented in the GFS
framework as the net value of additions minus with-
drawals. Nonetheless, full inventory accounting could
allow for the gross recording of all the movements in
inventories in the underlying administrative records.
Similarly, tax revenue is presented net of nonpayable
tax credits (see paragraphs 5.29–5.32).3.148 Acquisitions and disposals of each category
of fi nancial assets/liabilities are also presented net
in the GFS framework, to refl ect the nature of the
fi nancial fl ows. For example, only the net change in
the holding of assets related to currency and deposits
is presented, not gross receipts and disbursements.
Similarly, additions to liabilities in the form of loans
are presented net of repayments. However, for ana-
lytical and administrative reasons, it may be useful to
develop source data on the gross acquisitions and the
gross disposals of each fi nancial instrument as sepa-
rate data categories.3.149 Other economic fl ows are presented net.
Th at is, the net holding gain for each asset and lia-
bility is presented, not gross holding gains and gross