Approaches or Methods of National Income Accounting - Income and Product Approach

Four approaches are used in National Income accounting and they are: 
1. Income Approach 
2. Product Approach 

3. Expenditure Approach

4. Value Added Approach

1. Income Approach of NI Accounting
This approach is based on the estimation of income of various factors of production. Income method considers payments made to all productive resources of the country in the form of rent, wage, interest and profit. Thus,

GDI = Rent Wage Interest Corporate Profits along with Indirect Taxes and Depreciation
GNI = GDI NFIA
NNI = GNI-Depreciation

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2. Product Approach of NI Accounting
According to this method, national income is measured in the form of total product obtained from each economic sector such as primary, secondary and tertiary sectors.

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3. Expenditure Approach

The total expenditure incurred by the society in a particular year is added together. This includes personal consumption expenditure, net domestic investment, government expenditure on goods and services, net foreign investment.

Gross National Income= Individual Expenditure Government Expenditure

4. Value Added Method/Approach

The difference between the value of material outputs and inputs at each stage of production is the value added.

All such difference are added up for all industries in the economy, to arrive at the GDP