Operating Surplus - Derivation of Operating Surplus in UNSNA

Derivation of Operating Surplus in UNSNA

A simple definition of business profit would be "sales less costs", and the accounting derivation of operating surplus is similar (although the SNA concept of entrepreneurial income better matches what is thought of as business profits). Starting off with Gross Output, expenditure on intermediate goods and services are deducted, to arrive at gross value added.

Value added may be stated gross (equal to the net output value, including consumption of fixed capital, i.e. depreciation charges) or net (excluding consumption of fixed capital). The net operating surplus (NOS) is thus the residual balancing item in the product account, obtained as follows:

• Gross value added (GV)
• less consumption of fixed capital. (CFC)
• equals net value added (NV)
• less Compensation of employees (CE)
• less indirect taxes paid by producers, reduced by producer subsidies received (IT-SU)
• equals net operating surplus (NOS)

In simple equations,

NOS=GV - (CE + (IT-SU) + CFC)

or

NOS=NV - (CE + (IT-SU)

Operating surplus can of course also be stated gross (GOS):

GOS=NOS + CFC

In this case, depreciation charges are included.