National Income

Accounting
By:
Espa, Divine Grace O.
Galang, Karlie Marie P.
Estabaya, Trisha G.
Tacud, Alrid B.
Francisco, Katrina Lyn D.
Navarro, Kaycee B.
Escalante, Aldrin G.

National Income is measured in terms of total

earnings of the factors of production or the total
market value of all final goods and services
produced by the citizens. These terms are
presented in terms of:
Gross National Product (GNP)
Gross Domestic Product (GDP)
Per Capita Income (PCI)
Per Capita GNP
The National Economic Development
Authority (NEDA) is the government agency incharge of maintaining the national accounting.

Gross National Product

It measures the market value of all final goods and services
produced by a nations economic resources during a specified
period of time. It reflects the economic performance of a nation .

GNP= PiQi
Where Pi= price of ith commodity in the given year
Qi= quantity of production of ith commodity for a given
year

To avoid a misleading interpretation of Current GNP,

the Real GNP must be used in gauging the economic
performance of the nation.

Current GNP
Real GNP = ----------------------- x 100%
Price Index
Price in any given year
Price Index = ------------------------------------- x
100%
Price in base year
A price index consumes that the comparison of the
GNP is based on a common base year.

Per Capita GNP refers to the GNP share of

each person if national income is divided
equally among the population of the nation.

GNP

Per Capita GNP= -------------Population

Year

Current
GNP
(P
Million)

CPI
2000
= 100

Real GNP
(P
Million)

Populatio
n
(Million)

Per
Capita
Current
GNP

Per
Capita
Real GNP

2010

3876603

102.26

3791030

79

49071

47988

2011

4218883

106.54

3960037

80

52736

49500

2012

4631479

112.87

4103364

82

56481

50041

2013

5248064

120.67

4349277

84

62477

51777

2014

5885050

127.10

4630280

85

69236

54474

2015

6570310

134.85

4872386

87

75521

56004

2016

7274660

145.36

5004613

89

81738

56232

Consumer Price Index (CPI)

A price index is a device for combining
movements of many individual prices for the
purpose of estimating the average movement of
some specified group of prices. It is often used
to deflate variables expressed in money terms to
take out the effect of price changes. Also, the
inflation rate is reflected in the growth of the
price index.
CPI is designed to measure changes in prices of
the goods and services.

Table: Consumer Price Index 2010 - 2016

Year

CPI

Inflation Rate
(%)

2010

102.26

2.26

2011

106.54

4.18

2012

112.87

5.95

2013

120.67

6.91

2014

127.10

5.33

2015

134.85

6.10

2016

145.36

7.79

Inflation is the continuous increase

in the general level of prices. The
formula for determining inflation is
as follows:
CPI2 CPI1
Inflation Rate = --------------------- x
100%
CPI1
Where : 2= Present Year
1= Base Year

Gross Domestic Product (GDP)

GDP is the total market value of all final goods and
services produced within the territories of a nation in
a given year. An increasing GDP suggests an
improving economy. It may only mean the value of
final goods and services produced by the foreigners
in these third world countries is increasing.
In the computation of GDP, the incomes derived from
investments or wealth in other countries is excluded.
Whereas in the of GNP, the incomes of the citizens
earned from abroad are included. Hence, for the third
world economy, the GNP is a better indicator of
growth than GDP.

Three
Approaches of
Measuring
GNP

1. GNP via the EXPENDITURE APPROACH

It is measured through the flow of currently
produced goods and services by accounting for all
the expenditures of the different sectors in the
economy, i.e. the consumers, business, government
and foreign sectors.

Table: Gross National Product via EXPENDITURE APPROACH

ITEM

VALUE

1. Personal Consumption Expenditures

1 059 466

2. General Government Consumption

Expenditures

86 523

3. Gross Domestic Capital formation or

investment

239 667

a. Fixed capital formation

b. Increase in stocks

232 492
7 175

4. Exports of goods

648 297

5. Less: Imports of goods and non factor services

620 328

6. Statistical Discrepancy

(46 607)

Expenditures on Gross Domestic Product

7.Net factor income from the rest of the world
Expenditures on Gross national product

1 370 018
138 600
1 508 618

2. GNP via INCOME APPROACH

It measures national income (GNP) through the below
mentioned factored incomes that are earned by resource
owners in current production.
a. Compensation of employees it includes all wages and
salaries earned by households, fringe benefits, private
pensions and welfare funds.
b. Proprietors income it is the net profits of
unincorporated businesses and self employed
professionals.
c. Rental Income of Persons it is the income in the form of
rent and royalties received from the ownership of
property.
d. Corporate Profits these includes the profits of all
private corporation
e. Income from interest it is the interests received by

Table: GNP via INCOME APPROACH

ITEM

VALUE

1. Compensation of employees and entrepreneurial

and property income of persons

1 156 385

2. General government income from property and

entrepreneurship

31 484

3. Corporate Income

16 194

a. Corporate Tax

21 304

b. Corporate Savings

(5 110)

National Income

1 204 063

4. Indirect Taxes

132 506

5. Less: Subsidies
Net National Product
6. Capital Consumption (depreciation) allowance
Gross National Product

3 993
1 332 576
176 042
1 508 618

3. GNP via Value-added Approach or

Industrial Origin
It is the difference between the market value of all
goods produced and the cost of all goods produced
and the cost of all the goods and materials produced
by other procedures. It is the net contribution of the
firm to the total value of production.

Table: GNP by Industrial Origin, 2016

INDUSTRY
1. Agriculture, Fishery, Forestry
a. Agriculture industry
b. Forestry
2. Industry Sector
a. Mining and quarrying
b. Manufacturing

VALUE
252 010
250 522
1 488
442 352
23 516
317 074

c. Construction

58 805

d. Electricity, gas and water

42 957

3. Service Sector

675 656

a. Trans., comm. And store

120 582

b. Trade

237 128

c. Finance

80 838

d. O. dwellings and r. estate

63 333

e. Private Services
f. Government services
Gross Domestic Product
Net factor income from abroad
Gross National from abroad

116 718
57 056
1 370 018
138 600
1 508 618