PROBLEMS OF CLASSIFICATION AND DEFINITION

One problem that has to be faced in the preparation of social accounts relates to classification into  sectors and accounts. The relationships between production, consumption, investment and saving arc easy to identify in hypothetical examples. But when we consider the actual accounting behavior, we may not find it possible to ignore the various types of transactors operating in the economy. For instance, the directors of the company will not act as the owners of private businesses will do. The decisions of both are different from those of the government administrators running trading and manufacturing corporations. Hence it may be necessary to divide and sub-divide further the firms or production accounts corresponding to different types of business organizations. For example. it may be proper to sub-divide the government accounts into accounts for central and local government. Similarly, the accounts of the firms can be split into parts like ‘production’ or ‘operating account’ and the ‘operating account’ dither ‘appropriation account’. It may be found necessary to have separate operating account and a separate appropriation account for each sub-division