Tutors on net
Tutors on NetTutors on Net

National Income Accounting

 National Income Accounting

Meaning

            National Income accounting is also known as social accounting. Cooper has defined as “Social Accounting is concerned with the statistical classification of the activities of human beings and human institutions in ways which help us to understand the operation of the economy as a whole. The field of study summed up by the words ‘social accounting’ embraces, however, not only the classification of economic activity, but also the application of the information thus assembled to the investigation of the operation of the economic system.”

Components of Social Accounting

The principal forms of economic activity are production, consumption, capital accumulation, government transactions and transactions from the other parts of the globe. These are the components of social accounting.

  1. Production Account
  2. The production account relates to the business sector of the economy. It includes all forms of productive activity, i.e. manufacturing, trading etc. it covers public and private companies. Let us see the structure of a Production account which is used for recording in accounting purposes.

    Payments

    Value in Million $

    Receipts

    Value in Million $

    Payments to personal sector i.e. Wages etc.

    xxx

    Consumption Expenditures

    xxx

    Payments to Government

    xx

    Government Purchases

    xx

    Business Saving

    x

    Gross Private Domestic Investment

    xx

    Import of Goods and Services

    x

    Export of Goods and Services

    xx

    Gross National Income

    xxx

    Gross National Expenditure

    xxx

    Explanation of this tablet

    1. Payments to Personal sector include rent, interest, dividend, wages, salaries, employee’s compensations and proprietor’s income.

    1. The term payments to government include producers’ net payment to government in the form of taxes and social security payments.

    1. Business saving refers to producers’ retained income or corporate saving.

    1. The last item relates to payments made to foreign sector for imports of goods and services.

    All these items comprise of gross national income.

    1. The receipts side of the production account shows the incomings to the business sector from sales of goods and services to the household or personal sector.

    2. Government purchases refer to sales of goods and services sold by the business sector to government.

    3. Gross Private domestic investment comprises the gross flow of capital goods and the net change in inventories.

    4. Net exports refer to the income earned by the business sector by selling goods and services to the other parts of the globe.

    The sum of all these items comprises of GNP by expenditure.

  3. Consumption Account
  4. The consumption account refers to the income and expenditure account of the household or personal sector. The household sector includes all consumers and non-profit making institutions such as clubs and associations. Let us see the structure of consumption account.

    Payments

    Value in Million $

    Receipts

    Value in Million $

    Consumption Expenditure

    xxx

    Receipts from business, wages and salaries etc.

    xxx

    Payments to Government

    xx

    Receipts from Government

    x

    Personal Savings

    xx

       

    Transfers to foreigners

    x

       

    Personal outlay and Savings

    xxx

    Personal Income

     

    Explanation of this Tablet

    1. The chief item in the left side of the consumption account is the expenditure of household consumers in buying goods and services from the business sector to satisfy their wants.

    1. Payments to government include taxes and special insurance contributions.

    1. The next item refers to personal saving used for investment by the household sector.

    1. The item transfers to foreigners’ might be taken to relate to investment in foreign securities or expenses by the residents on education or travel abroad.

    1. The right hand side of the account shows income of business and household consumers as the major item which comes in the form of wages, salaries etc.

    1. Receipts from Government include transfer payments and net interest payments on public debt.

  5. Government Account
  6. The government account relates to the outflows and inflows of the government sector. In the government sector are included all public authorities centre, states and local authorities in a nation. The government account is structured as follows.

    Payments

    Value in Million $

    Receipts

    Value in Million $

    Payments to Business

    xx

    Receipts from business

    xx

    Payments to Persons

    x

    Receipts from persons

    xx

    Government to Surplus

    xx

       

    Payments to Foreigners

    x

       

    Government outlay and surplus

    xx

    Government Receipts

    xx

    Explanation of this Tablet

    1. Government surplus refers to investment made by the government out of its surplus or saving.

    1. Nevertheless, the significant point to be noted is that state owned business enterprises are excluded from the government sector as they have been included in the business sector for the reason that like private enterprises public undertakings produce goods and services for sale.

  7. Capital Account
  8. The capital account shows that saving equals domestic and foreign investment. Savings is invested in fixed capital and inventories within the country and or in international assets. The structure of capital account is shown below.

    Payments

    Value in Million $

    Receipts

    Value in Million $

    Gross Private domestic investment

    xx

    Business Savings

    x

    Net foreign investment

    x

    Personal Saving

    xx

    Gross Investment

    xx

    Government Surplus

    xx

       

    Gross Saving

    xx

Explanation of this tablet

  1. The gross private investment includes the gross flow of capital goods and net change in inventories.
  1. Net foreign investment is the foreign surplus on current account.
  1. On the right side, gross saving includes business and personal savings and government surplus.

Online Live Tutor Components of Social Accounting:

    We have the best tutors in Economics in the industry. Our tutors can break down a complex Components of Social Accounting problem into its sub parts and explain to you in detail how each step is performed. This approach of breaking down a problem has been appreciated by majority of our students for learning Components of Social Accounting concepts. You will get one-to-one personalized attention through our online tutoring which will make learning fun and easy. Our tutors are highly qualified and hold advanced degrees. Please do send us a request for Components of Social Accounting tutoring and experience the quality yourself.

Online National Income Accounting Help:

    If you are stuck with an National Income Accounting Homework problem and need help, we have excellent tutors who can provide you with Homework Help. Our tutors who provide National Income Accounting help are highly qualified. Our tutors have many years of industry experience and have had years of experience providing National Income Accounting Homework Help. Please do send us the National Income Accounting problems on which you need help and we will forward then to our tutors for review.