question_answer

Giving reason explain how should the following be treated in estimating national income:

(i) Payment of bonus by a firm

(ii) Payment of interest on a loan taken by an employee from the employer.

Answer:

(i) Payment of bonus by a firm:

Payment of bonus by a firm should be included in the national income because it is a part of the compensation of employees (while estimating National Income by Income Method).

(ii) Payment of interest on loan taken by employee from the employer:

Payment of interest on loan taken by employee from the employer should be included in the national income because it is a part of operating surplus (while estimating National Income by Income Method).