Importance Of Social Accounting In Economic 

The importance of social accounting in economy is very important because social accounting helps in understanding the structure of economy and relative importance the different sector and flows

it is very important because they are understand the government policies in future and present condition.

The uses of social accounting are as follows: 

In Classifying Transactions. 

Economic activity in a country involves innumerable transactions relating to buying and selling, paying and receiving income, exporting and importing, paying taxes, etc. The great merit of social accounting lies in classifying and summarising these different kinds of transactions properly, and deriving from these such aggregates as national income, national expenditure, saving, investment, consumption expenditure, production expenditure, government spending, foreign payments and receipts, etc.

In Understanding Economic Structure. Social accounting helps us to understand the Structure of the body economic. It tells us not only about the national income but also about the size of production and consumption, the level of taxation and saving and the dependence of the economy upon foreign trade.

In Understanding Different Sectors and Flows.

Social accounts throw light on the relative Importance of the different sectors and flows in the economy. They tell us whether the contribution of the production sector, the consumption sector, the investment sector or the rest of the world sector is greater than the other sectors in the national accounts.

In Clarifying Relations between Concepts. 

Social accounts help in clarifying the relationships between such related concepts as net national product at factor cost and gross national product at market prices.

In Guiding the Investigator. 

Social accounts are a guide for the economic investigator by indicating the type of data which might be collected for analysing the behaviour of the economy. Such data might relate to gross national product, government expenditure on goods and services, private consumption expenditure, gross private investment, etc.

In Explaining Trends in Income Distribution. 

Variations in the components of social accounts are a guide to the trends in income distribution within the economy. 

In Explaining Movements in GNP. Movements in gross national product valued at constant prices and expressed per head of population indicate changes in the standard of living. Similarly, changes in the level of productivity can be measured by relating gross national product valued at constant prices to working population per head.

Provide a Picture of the Working of Economy.

Social accounts provide an ex part picture of the working of the economy. "They can also be used as a framework for drawing up an ex ante forecast of the likely outcome of the economy in the future. Thus, social accounts ensure consistency of forecasts, both internally and in relation to other known facts."

In Explaining Interdependence of Different Sectors of the Economy.

Social accounts also provide an insight into the interdependence of the different sectors of the economy. This can be known from a study of the matrix of social accounts.

In Estimating Effects of Government Policies

The importance of social accounts lies in estimating the effects of government policies on different sectors of the economy and in formulating new policies in keeping with changes in economic conditions, as revealed by national income accounts. Their main function is to help the government judge, guide or control economic conditions and to formulate economic policies which aim at maximisation of national income, keeping employment at a high levell reducing inequalities of income and wealth, preventing undue rise in prices, conserving foreign exchange etc. 

Helpful in Big Business Organisations. Social accounts are also used by big business house for assessing their performance and to improve their prospects on the basis of the statistical information about the various sectors of the economy.

Useful for International Purposes

Social accounting is also useful for international purpose A comparative study of the social accounts of different countries of the world helps in the categorisation of countries into underdeveloped, less developed and developed. It is on the basis of social accounts that the various agencies of the United Nations make provisions for aid to poor countries of the world