Is interest paid by one firm to another a part of Intermediate Cost???? Also is interest paid on loans taken for consumption purposes (please give examples) an intermediate cost???? Also please explain this answer with a relevant answer
Why is interest paid by one firm to another not included in national income under the income method??? ?
1 Answer posted 7 hrs ago
Dear student,
The interest paid by one firm to another is not included in the national income by income method because it was already included as a part of the profits of the firm.
Dear student,
Interest paid on a loan is included in national income only if the loan is taken for such a purpose that it is used for production purposes or adds to the flow of goods and services.
Interest paid on a loan is included in national income only if the loan is taken for such a purpose that it is used for production purposes or adds to the flow of goods and services.