The Income Approach Components of National Income

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The Income ApproachComponents of National Income
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• 1. Compensation of Employees wages and salaries
  paid to employees
• 2. Rents income received from supplying property
  resources
• 3. Interest income paid to the suppliers of
  money capital (loans, deposits, bonds...)

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4. Profits two accounts

• A. Owners income income from partnerships and
  unincorporated businesses
• B. Corporate Profits income to owners of
  corporations and subdivided into
• Corporate income tax
• Dividends
• Undistributed corporate profits (retained
  earnings)

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• The previous are components of national income
  income received from participating in production
  process.
• Yet, need to add other components

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From National Income to GDP

• Indirect Business Taxes sales taxes, excise
  taxes, business property tax, license fees, and
  customs duties.
• Consumption of Fixed (private and social)
  Capital to count depreciation allowance
• Net Foreign Factor Income the difference between
  income Kuwaitis gain from supplying resources
  abroad and income foreigners gain by supplying
  resources in Kuwait.

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Other National Accounts

• 1. Net Domestic Product (NDP)
• GDP Consumption of fixed capital (Dep.)
• NDP is GDP adjusted for depreciation.
• NDP
• net foreign factor income
• indirect business taxes
• NI

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• 2. Personal Income (PI) all income received
  (earned or not)
• NI
• Social security payments
• corporate income tax
• undistributed corporate profits
• transfer payments
• Personal Income

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• 3. Disposable Income (DI) personal income after
  paying personal taxes
• After paying your tax, you can consume your
  income (C) and\or save (S)
• DI C S

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GDP

• - consumption of fixed capital NDP- net
  foreign factor income- indirect business tax
  NI- SS- corporate income taxes- undistributed
  corporate profits transfer payments PI-
  personal tax DI- C S