Explain the problem of double counting? …

 If a single transaction is recorded twice or more than twice in the calculation of national income, then it is known as double counting.
The problem of double counting is solved by value added method. Theoretically, to avoid double counting there may be two alternative ways:

1. Final Product Approach
2.  Value Added Approach

1. Final Product Approach: According to this, the value of only final products, i.e. which go for final consumption or capital formation should be included. But in practical application of this approach double counting still creeps in as every producer treats the product he sells as final whereas the same might have been used as an intermediate product by the buyer.
2.  Value Added Approach: Value added refers to the difference between the value of output and the value of intermediate consumption of each producing unit in the country. Sum total of a value added by all the producing units within the domestic territory of the country is equal to Domestic Product.focusing on value addition, we avoid double counting because we are not accounting for the value of intermediate consumption.