Social Accounting



Social accounting can be defined as a set of organisational activities that deals with the measurement and analysis of the social performance of organisations and the reporting of results to concerned groups, both within and outside the organisation.


Social accounting, also known as national income accounting, is a method to present statistically the inter-relationships between the different sectors of the economy for a thorough understanding of the economic conditions of the economy.


Components of Social Accounting:

The principal forms of economic activity are production, consumption, capital accumulation, government transactions and transactions with the rest of the world. These are the components of social accounting. If the incomings and outgoings of a country relating to these five activities are shown in the form of accounts, they show a closed network of flows representing the basic structure of the economy. These flows are always expressed in money terms.


1) Production Account:

The production account relates to the business sector of the economy. It includes all forms of productive activity, i.e., manufacturing, trading, etc. It covers public and private companies, proprietary firms and partnerships, and state-owned business undertakings. 

2) Consumption Account:

The consumption account refers to the income and expenditure account of the household or personal sector. The household sector includes all consumers and non-profit making institutions such as clubs and associations.



3) Government Account:

The government account relates to the outflows and inflows of the government sector. In the government sector are included all public authorities—centre, states and local authorities in a country


(4) Capital Account:

The capital account shows that saving equals domestic and foreign investment. Saving is invested in fixed capital and inventories within the country and/or in international assets. 


5) Foreign Account:

Foreign account shows the transactions of the country with the rest of the world. This account covers international movements of goods and services and transfer payments and corresponds to the current account of the international balance of payments.




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