Professional Documents
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ACCOUNTING
NATIONAL INCOME
ACCOUNTING
System used to measure the
aggregate income and
expenditures for a nation.
Provides valuable indictor of an
economy’s performance.
GROSS DOMESTIC
PRODUCT (GDP)
Total market or money value of
all final goods and services
produced in an economy over
a period of one year.
GROSS NATIONAL PRODUCT
(GNP)
Market value of all the final
products produced by the
resources of the economy during
a specified period of time.
Produced by nation’s residents,
no matter where they are
located.
APPROACHES IN MEASURING
GDP
The Expenditure Approach
The Income Approach
Industrial Origin Approach
1. EXPENDITURE APPROACH
GDP = C + I + G + (X – M)
PERSONAL CONSUMPTION
EXPENDITURES (C)
Consumption is spending
by households on goods
and services.
PERSONAL CONSUMPTION
EXPENDITURES (C)
GOODS INCLUDE :
household spending on durable goods, such as
automobiles, appliance and any other goods that
last for more than one year, and
non durable goods, such as food and medicines
and other goods that do not last for a longer
period of time.
PERSONAL CONSUMPTION
EXPENDITURES (C)
SERVICES INCLUDE :
Intangible items, such as haircuts,
massage, medical care, banking
and finance
GROSS PRIVATE DOMESTIC
INVESTMENT ( I )
Investment is the purchase of goods
that will be used in the future to
produce more goods and services.
It is some of purchases of capital
equipment (such as machineries),
inventories, and structures (such as
buildings)
GROSS PRIVATE DOMESTIC
INVESTMENT ( I )
Sum of two components
Fixed capital
Changes in stock
GOVERNMENT CONSUMPTION
EXPENDITURE AND GROSS
INVESTMENT (G)
This account includes the value
of goods and services that
government at all levels (i.e.
national, provincial, city and
municipal levels) purchases
measured by their costs.
NET EXPORTS (X-M)
Exports (X) are expenditures by foreigners
for Philippine goods produced
domestically.
Imports (M) are the dollar amount of
Philippine’s purchase of foreign products
like automobiles, oil from Saudi Arabia
and other goods.
2. INCOME APPROACH
It measures GDP by adding all the
income earned by households in
exchange for the factors of production
during a period of time.
GDP = Compensation of Employees +
Rents + Profits + Net Interest + Indirect
Taxes + Depreciation or;
GDP = NY + IBT + D
COMPENSATION OF
EMPLOYEES
It comprises mainly of income earned
from wages, salaries and certain
supplements paid by firms and
government to suppliers of labor.
RENTAL INCOME OF
PERSONS
This includes the rental fees on houses,
apartments, and condominiums rented out by
landlords as well as the offices rented out by
building owners to businesses.
It includes also the fees on lands leased out by
land owners for the use of their property.
PROFITS
It includes those earned by self employed
proprietorships and partnerships who
simultaneously manage their businesses and at
the same time pay themselves for labor
services rendered to their firms.
Included are the corporate profits.
PROFITS
Three components of corporate profit
Dividends – made by join stock companies to
their shareholders for providing share capital.
Undistributed corporate profits – any after – tax
profits that are reinvested in the firm rather than
being paid out to the owners of the company
in the form of dividends.
Corporate income tax – direct tax levied by
the government on profits accruing to
businesses.
NET INTEREST