Classify the following as factor income or transfer income Unemployment allowances

Answer:-

(i) Unemployment Allowances.

It is a transfer Income as no services and goods are provided against the payment. In other words, no productive work is done against the payment received.

(ii) Salary received by Rakesh from a company.

It is a factor Income as Rakesh is paid against services provided to the company by him. In other words, productive work is done against the payment received.

(iii) Financial help to earthquake victims.

It is a transfer income as no services and goods are provided against the payment. In other words, no productive work is done against the payment received.

(iv) Compensation received from the employer.

It is a factor income as compensation is paid against services provided to the company by the employee. In other words productive work is done against the payment received.

(v) Claim received from Insurance company by an injured worker.

It is a transfer income as no services and goods are provided against the payment. In other words, no productive work is done against the payment received.

(vi) Birthday gift received from a friend.

It is a transfer income as no services and goods are provided against the payment. In other words, no productive work is done against the payment received.

(vii) Bonus received on Diwali.

It is a factor income as Bonus is paid against services provided to the company by the employee. In other words, productive work is done against the payment received.