Abstract
Financial accounts and balance sheets play an important role in the system of national accounts, focusing on the accumulation and stocks/positions of financial assets and liabilities. This chapter starts with an overview of how the financial accounts and balance sheets are embedded in the system of national accounts, how they are an intrinsic part of a comprehensive and fully consistent accounting system, governed by various accounting identities. It also explains how this results in a set of interrelated accounts which show how different sectors in a country interact with each other, and how the balances of assets and liabilities change over time. The chapter also includes some further guidance on the definitions of sectors and financial instruments, and accounting rules which guide the recognition and valuation of assets and liabilities.
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