John Hicks developed national income accounting, also known as national accounting, to present the interrelationships between economic sectors and understand economic conditions. It accounts for production, consumption, government transactions, capital accumulation, and transactions with other countries. National accounting shows payments and receipts between sectors in a closed network representing the basic structure of the economy. It is useful for policymaking, economic analysis, and international comparisons.

2. •John Richard Hicks
British Economist
Nobel Memorial Prize in Economic Sciences (1972)
“Nothing else but the accounting of the whole community or
nation, just as private accounting is the accounting of the
individual firm”.
•Also known as “National Income Accounting”
•Method to present statistically the inter-relationships between the different
sectors of the economy for a thorough understanding of the economic conditions of
the economy.
•Method of studying the structure of the economic body.
•Technique of presenting information about the nature of the economy of a society
with a view not merely to get an idea of prosperity or wealth.
•A guidelines for collective policy to influence the economy.

3.  Production.
 Consumption.
 Government transactions.
 Capital accumulation.
 Transactions with the rest of the world.
If the incomings and outgoings of a country relating to these five activities are
shown in the form of accounts, they show a closed network of flows
representing the basic structure of the economy. These flows are always
expressed in money terms.

4. •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, proprietary firms and
partnerships, and state-owned business undertakings.
• Since all productive activity takes place within this sector, all
payments flow from it to the other sectors.

6. •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.

8. •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 country.

10. •The capital account shows that saving equals domestic and foreign investment.
Saving is invested in fixed capital and inventories within the country and/or in
international assets.
•The gross private investment includes the gross flow of capital goods and net
change in inventories.
• Net foreign investment is the foreign surplus on current account.
• On the right side, gross saving includes business and personal savings and
government surplus.

12. •Foreign account shows the transactions of the country with the rest of the world.
•This account covers international movements of goods and services and transfer
payments and corresponds to the current account of the international balance of
payments.
•It should be noted that in the foreign account ‘exports’have been shown under
payments (on the left side) and ‘imports’ under receipts (on the right side). This is
because the amount received by the nationals of the country for exports is paid to
foreign countries in exchange for imports and transfer payments. Here payments
and receipts relate to the rest of the world and not to the country itself.

15. •The equality of the payments to one sectoral account and the receipts from another sectoral
account.
Example : payment of Rs. 279 crores by the production sector to the consumption sector,
reading row-wise in the Table is shown as the receipt of the consumption sector, reading
column-wise.
•The total payments of each sectoral account equal the total receipts of that sector.
Example :the total payments of the production sector reading row-wise amounting to Rs. 309
crores equal the total receipts of this sector, reading column-wise.
•The total payments of all sectors equal the total receipts of all sectors in the social
accounting matrix.
• Example : Rs. 714 crores both row-wise and column-wise .

16. •In Classifying Transactions
• In Understanding Economic Structure
•In Understanding Different Sectors and Flows
•In Estimating Effects of Government Policies
•In Explaining Movements in GNP
•Useful for International Purposes
•Basis of Economic Models

17. •Imputation
•Double Counting
•Public Service
•Inventory Adjustment
•Depreciation

18. •The green gross domestic product (green GDP or GGDP) is an index of economic
growth with the environmental consequences of that growth factored into a country's
conventional GDP
•Green GDP monetizes the loss of biodiversity and accounts for costs caused by climate
change.
• The green national product is an economic metric that seeks to include environmental
features such as environmental degradation and resource depletion with a country's national
product.

19. •Green accounting is a type of accounting that attempts to include factor
environmental costs into the financial results of operations.
•It has been argued that gross domestic product ignores the environment and therefore
policymakers need a revised model that incorporates green accounting.
•The major purpose of green accounting is to help businesses understand and manage
the potential exchange of goods and services between traditional economics goals and
environmental goals.
• It also increases the important information available for analyzing policy issues,
especially when those vital pieces of information are often overlooked.

20. •Green accounting helps promote a sustainable future for
businesses as it brings green public procurement and
green research and development into the big picture.
• Penalties for polluters and incentives (such as tax
breaks, polluting permits, etc.) are also a crucial part of
this type of accounting.