Factor Income From Abroad Case Study

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from abroad by national residents for rendering factor services in other countries and factor incomes paid to the foreign residents for rendering factor services in domestic territory of the country. Net factor income from abroad have following components: a) Net compensation of employees. b) Net income from property, i.e. rent interest and income from entrepreneurship. c) Net retained earnings of the resident companies working in foreign countries. d) Net flow of capital (i.e. inflow of capital – outflow of capital). Income Method: -Income method is also called Distributive Share Method or Factor Payment Method, which measures national income from the side of payments made in the form of wages, rent, interest and profits to the primary factor of production i.e. labour, land, capital and enterprise respectively for their productive services in an accounting year. According to this method, the income received by the residents of a country for their productive services during a year is added up to obtain national income. Thus, income method consists of adding together all the incomes that accrue to the factors of production by way of wages, profits, rents, interest and other values. This gives the national income classified by distributive shares. However, transfer payments and capital gains are excluded from NI. Thus, GNP is the sum total of following items or components: …show more content…

2 Wages and salaries: It includes sums received or deposited during a year by way of wages and salaries paid to households or workers by private firms and by the government as well as all other types of contributions like bonus overtime, commission, and social security contribution (provident fund, insurance,

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