Financial and Wealth Accounts
As the name suggests, the financial and wealth accounts record the financial flows and other economic flows that either increase a sector's wealth or decrease a sector's wealth, as well as the stock of assets and liabilities at a point in time. The financial and wealth accounts can be divided into the accumulation accounts and the balance sheet.
The accumulation accounts record transaction flows and other economic flows in non-financial assets, financial assets and liabilities. The accumulation accounts are divided into four accounts:
- capital account
- financial account
- revaluation account
- other changes in the volume of assets account
The balance sheet provides a stock dimension to the Canadian System of National Economic Accounts. The balance sheet account records the stock of assets and liabilities and resulting net worth for each sector of the economy.
The capital account records the acquisitions and disposals of produced and non-produced non-financial assets as a result of transactions with other units, internal bookkeeping transactions linked to production (such as changes in inventories and consumption of fixed capital) and the redistribution of wealth by means of capital transfers. For example, if a business purchases machinery or equipment, the acquisition of this fixed asset would be recorded in the capital account.
The financial account records acquisitions and disposals of financial assets and liabilities, also through transactions. For example, if a business borrowed money to purchase machinery and equipment the incurrence of the loan and subsequent cash payment for the machinery and equipment would be recorded in the financial account.
The revaluation account records changes in the values of relevant assets and liabilities that result from changes in their prices. For example, if as a result of buying machinery and equipment, the business became more productive and the price of its shares increased, the increase in the value of the shares would be recorded in the revaluation account. Any change in the reproducible cost of its machinery and equipment would also be recorded in this account.
The other changes in the volume of assets account records changes in the amounts of assets and liabilities held by institutional units or sectors as a result of factors other than transactions or revaluations. For example, if a natural disaster destroyed the machinery or equipment purchased by the business, the loss of the fixed asset would be recorded in the other changes in the volume of assets account.
Within the Canadian System of National Economic Accounts, the revaluation account and the other changes in the volume of assets account are combined into a single account called the “other changes in assets account”. This account does not distinguish between the change in the value of assets and liabilities due to price and other changes in volume. It combines these two other economic flows into a single flow called “other changes”. This is an instance where the Canadian System of National Economic Accounts deviates from the international recommendations as outlined in the "System of National Accounts 2008".
The balance sheet account records the stock of assets, liabilities and net worth for each institutional sector. For example, if a non-financial corporation purchased machinery or equipment that it intends to use repeatedly for more than a year to produce goods and services, it would be recorded on the non-financial corporation’s balance sheet as a non-financial asset—increasing the sector’s wealth.
Within the Canadian System of National Economic Accounts, the accumulation accounts and balance sheet account are compiled by institutional sector. The capital accounts are recorded for the six main institutional sectors, namely households, non-profit institutions serving households, general governments, financial corporations, non-financial corporations and non-residents. The general governments’ sector is disaggregated into the federal general government sector, provincial and territorial general governments sector, local general governments sector, the Aboriginal general governments sector and the social security funds (Canada and Quebec pension plans) sector.
The financial account, other changes in assets account and balance sheet account show significantly more institutional sector detail than the capital accounts -- specifically related to financial corporations. Financial corporations play an important role in facilitating the flow of funds across the economy and therefore they take on a prominent role in the financial and wealth accounts.
The financial account, other changes in assets account and balance sheet account are recorded for the six main institutional sectors. In addition, the financial corporations’ sector is disaggregated into the following subsectors:
Total monetary authorities
Total chartered banks and quasi-banks
Insurance and pension funds
—Life insurance business
—Segregated funds of life insurance companies
—Trusteed pension funds
—Property and casualty insurance companies
Total other private financial institutions
—Money market funds
—Other mutual funds
—Sales finance and consumer loan companies
—Issuers of asset-backed securities
—Other private financial institutions
Financial government business enterprises
Within the Canadian System of National Economic Accounts, the financial and wealth accounts consist of the following group of accounts: