While using expenditure method, the following precautions are required to be taken:
(i) Only final expenditure is to be taken into account to avoid error of double counting.
(ii) Expenditure on second hand goods is not to be included because value of second goods has already been accounted for during the year of their production.
(iii) Expenditure on shares and bonds is not to be included in total expenditure as these are mere paper claims.
(iv) Expenditure on transfer payments by the government is not to be included.
(v) Imputed value of expenditure on goods produced for self-consumption should be taken into account.
