Statement of Operations

The statement of operations provides a summary of a sector or subsector’s transactions within an accounting period. It shows how the government raises revenues and how it spends them; providing a net operating balance. It shows how the government acquires or disposes of non-financial assets, how it acquires or disposes of financial assets, and how it incurs or extinguishes liabilities; providing a change in net worth due to transactions. The net operating balance minus the net acquisition of non-financial assets, or the net acquisition of financial assets minus the net incurrence of liabilities, provides the net lending or borrowing of the government, or in other words; whether it can lend funds or needs to raise funds from other sectors in order to sustain its operations.

The key components and balances contained in the statement of operations include:

• revenues
• expenses
• net or gross operating balance
• net or gross investment in non-financial assets
• net lending or borrowing
• net acquisition of financial assets
• net incurrence of liabilities