2.108. Assets are defined in the system as instruments or entities over which ownership rights are enforced by institutional units and from which economic benefits may be derived by holding them, or using them, over a period of time. Financial assets are assets that are in the form of financial claims on other economic units. All other assets are described as non-financial assets and include fixed assets, inventories, valuables (e.g. works of art) and non-produced assets (e.g. natural forests, mineral reserves). Each of these classes of assets is described more fully in the section ahead on classification of flows and stocks.
2.109. Liabilities are defined in the system as obligations to provide economic value to another economic unit. Liabilities are the counterparts of financial assets held by the claimant economic units.
2.110. Shares and other contributed capital of public corporations and quasi-corporations are viewed as financial claims on the corporations and quasi-corporations and the counterpart of financial assets of the owners of the corporations (i.e. the proprietor governments and minority shareholders).
It should be noted that, for general government, net assets and net worth are identical
2.111. As previously discussed, the GFS net operating balance (NOB) is equal to change in net worth due to transactions. All changes to net worth arising from transactions are recorded as either revenues or expenses. All transactions other than revenues and expenses do not change net worth. The NOB is equal in concept to the national accounting balance of net saving plus capital transfers but, in Australia, is not the https://paydayloansohio.net/cities/akron/ same in value because of measurement differences between the GFS system and the ASNA, as discussed in chapter 7. When the NOB is positive, it indicates that surplus funds have been generated from current operations and are available to finance capital acquisitions. When the NOB is negative, it indicates that a shortfall has been incurred on current operations and that it has been necessary to liquidate assets, incur liabilities or increase equity in order to finance the operations.
They are the counterparts of liabilities of the units on which the claims are held
2.112. GFS net lending(+)/borrowing(-) represents the balance remaining after current operations and the net acquisition of non-financial assets. It is equivalent in concept to the national accounting balance of the same name, but may be different in value due to measurement differences. When net lending(+)/borrowing(-) is positive it indicates that, on a net basis, the subject unit or sector had to purchase financial assets and/or repay liabilities in order to defray surplus funds. When net lending(+)/borrowing(-) is negative it indicates that, on a net basis, the subject unit or sector had to liquidate financial assets, incur liabilities and/or increase equity in order to finance current operations and capital acquisition.
2.113. GFS net worth represents the value of an entity’s assets at a point in time less the value of financial claims on the entity by other units, including shareholders and owners. Net worth may be positive or negative. For public corporations, for example, net worth will be negative if the market value of the corporation’s shares exceeds the value of its net assets (i.e. asset less liabilities) and positive only if the market value of the shares is less than net assets. For this reason, net assets may be used in preference to net worth in some presentations involving public non-financial and financial corporations. Change in net worth is a measure of the extent to which the current period’s operations, revaluations and other volume changes have added to or subtracted from net worth during the accounting period. It therefore includes the assessed changes in the market value of assets, liabilities and shareholders’ funds during the accounting period, which is measured by change in net worth due to revaluations .