Questions

If as a business, you buy goods or services on credit from a supplier (accounts payable) then the supplier will supply the goods and business will incur a liability to the supplier for that amount, but no cash will change hands at that stage.

Some of those shop keepers allowed regular "trustworthy" customers to purchase items without having the full payment.

Hence, Buying on credit means that no actual money has changed hands.

National Income is the total income value of the goods and services produced by the residents of a country, usually during the period of one year.

National Income is categorized into 6 components. They are :

1. Compensation of Employees (Wages and Benefits)
2. Corporate Profits
3. Rental Income
4. Proprietors Income (Income of unincorporated business)
5. Net Interest

The Largest Component of National Income is Compensation of Employees.

The Largest component of National Income in India is Service Sector.