Calculate the value of 'Sales' from the following data : State and explain any two precautions that must be taken while estimating national income by income method.

Question

Accepted Answer

From the table:
- Subsidies = 200
- Operating Surplus = 500
- Opening Stock = 100
- Closing Stock = 600
- Intermediate Consumption = 3,000
- Depreciation = 700
- Profits = 750
- NVA_FC = 2,000

NVA_FC = Value of Output - IC - Depreciation
2,000 = Value of Output - 3,000 - 700
Value of Output = 5,700
Change in Stock = 600 - 100 = 500
Sales = Value of Output - Change in Stock = 5,700 - 500 = Rs. 5,200 lakh

Precautions for Income Method:
1. Do not include transfer incomes as they are not earned through productive activity.
2. Do not include capital gains from second-hand goods.