Difference between flow of fund account and national income account in economics

DIFFERENCE BETWEEN FLOW OF FUNDS ACCOUNTS AND NATIONAL INCOME ACCOUNTS 

The flow of funds accounts differ from national income accounts in many ways.

(1):- The national income accounts are confined exclusively to nonfinancial transactions. They neglect the link between saving and investment aggregates with lending and borrowing by different sectors of the economy.

 

(2):-The national income accounts confine all real investment to the business sector with the exception of building construction. Consumers and governments are not allowed to invest in national income accounts. The flow of funds accounts treat consumer purchases of durable goods as real investment. Government enterprises are included in the producing sector of national income accounts but in the flow of funds accounts they are included in the government sector.

(3):-The number of sectors in flow of funds accounts are more with larger details than in the national income accounts. They are defined institutionally in flow of funds accounts whereas they are defined functionally in national income accounts.

(4):-There are fewer imputations in the flow of funds accounts than in national income accounts. For instance, taxes are carried on a cash basis in flow of funds accounts whereas some sectors are shown on an accrual basis in national income accounts.