Posted in Finance, Accounting and Economics Terms, Total Reads: 377
Definition: Macro Accounting
Macro accounting as its name only suggests is the accounting that is done for the whole nation taking into account the various macroeconomic indicators such as gross domestic product, inflation, commodity prices in the country, amount of imports and exports that is done by the country in the given financial year or the level of forex reserves lying with the central bank of nation such as for India it is controlled and done by Reserve Bank of India or the value of the currency of the country i.e. the net amount of appreciation or depreciation in its value as against dollar or other foreign currencies such as euro, yen, Swiss franc or the amount of debt that the company has taken etc.
Macro accounting is done on the basis of the official statistics that are provided by various public departments of the Government of the nation. Macro accounting only looks at the overall picture or the overall economic development of the country. It does not look at individual sectors or individual industries or companies. Hence, macro accounting is basically done to judge the improvement or the growth of the nation on aggregate basis in any fiscal year. This type of accounting also helps economists to forecast future economic trends and also helps them to judge that the economy of any particular nation is standing at which stage of the total economic life cycle.
Hence, helps them to form and analyze the trends happening in the overall economic picture and compare the economic growth of various other nations. This type of macro accounting data is closely watched by various market participants, analysts, foreign institutional investors as well as various other kinds of retail investors. Sovereign credit rating of the country is also affected by this data as it tends to provide accurate data to various credit rating agencies as well which help them to form their opinion or outlook on the nation.