Meaning of National Income Accounting:
National income accounting is a method or format of presenting and preparing national income statistics. National Income accounting adopts the principles of business accounting for the estimation of National Income.
Though business accounting adopts the principles of business accounting for the estimation of National Income. Though business accounting is very old but its significances for National Income accounting became apparent only after the formulation of The General Theory of Employment by Keynes in the year 1936.
Business accounting or commercial is based on the principles of doubts entry system. In every business transaction there are two parties, namely one who pays and the other who receives such buyers and sellers. In double entry system there are two forms or aspects relating to each party, namely debit and credit.
Importance of National Income Accounting:
National income accounting is an important discovery of the twentieth century. The credit for presenting this system in a systematic and scientific manner goes to Simon Ku/nets. This system has been used in India only after getting independence. Before independence national income data were not available officially.
National income accounts present the picture of the entire economy in a very short form reflecting the significance of all economic activities. The significance of national income accounting becomes evident from the following points:
(i) Information about the economy:
National income accounting provides detailed information relating (of the contribution of different sectors of an economy in the production process. This indicates the relative significance of all the sectors of economy, such as agriculture, industry, services etc,
(ii) Sharing of national income:
National income accounts show as to how national income is shared among various factor of production.
(iii) Information about structural changes:
National income accounting helps in finding out structural changes that take place in an economy.
(iv) International Comparisons:
National income accounting can be helpful in making international comparison about volume of output.
(v) Adequate & reliable information about economic life:
Adequate and reliable information about various aspects of economic life is very essential, these days. National income accounting is very useful in providing information about various aspects of economic life in a country.
(vi) Information about economic development:
Every country tries its level best to increase its lie of economic development. National income accounting enables us to know as to whether the rate of economic development is more or less at par with in comparison to that of last year.