Economic Awareness - Sectors of Indian Economy
Undistributed profits of companies are accounted under which component in the Income Method of National Income?
Undistributed profits of companies are accounted under which component in the Income Method of National Income?
medium Q8 of 15
Step-by-Step Solution
Step 1: Understand 'Profit' component
Profits in the Income Method include both distributed profits (like dividends) and undistributed (retained) profits of entrepreneurs and companies.Step 2: Analyze options
Undistributed profits form part of the overall profit component as residual income after other factor payments. They are not classified as wages, rent, or interest.Final Answer:
Profits earned by entrepreneurs → Option DQuick Check:
Undistributed profits = Part of Profits component ✅
Quick Trick: Profits include both distributed and undistributed earnings.
Common Mistakes:
- Confusing undistributed profits with wages, rent, or interest.
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