Current System of National Income Accounts

The present system of national accounts (SNA) views the relationship between the environment and the economy from economic perspective only.  It groups the national income accounts into three categories, viz., current accounts, asset accounts and balance sheets. Current accounts deal with the production or income and the use of income while asset accounts cover changes in assets and liabilities and changes in net worth. On the other hand, the balance sheets present stock of assets and liabilities, and net worth.

The most familiar of the three accounts is the current accounts (or the supply and use accounts).  In the supply and use accounts income is computed in three different ways:

1) The sum of value added (revenue minus intermediate consumption) across all industries (i.e., the production account);

2) The sum of final consumption and savings (disposable income) (i.e., the use of income account), and

3) The sum of employee compensation and operating surplus (i.e., the distribution of income account). Production in SNA covers only those goods and services that are bought and sold in markets.