Branches of Accounting-5th

8/2/2019 Branches of Accounting-5th

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DEFINITION

HUMAN RESOURCE ACCOUNTING

is the process of identifying and

measuring data about humanresources and communicating thisinformation to interested parties

AMERICAN ACCOUNTING SOCIETY COMMITTEE ONHUMAN RESOURCE ACCOUNTING


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Flamholtz

HRA is accounting for people as anorganizational resource. It involves

measuring the costs incurred bybusiness firms and other

organizations to recruit, select, hire,train and develop human assets. It

involves measuring the economicvalue of people to the organization.


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Importance of HRA

1. HRA provides useful information tothe management in the decisionmaking process relating to thefollowing matters-

Employment, locating andutilization of human resources.

Transfer, promotion, training andretrenchment of human resources.


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Planning of physical assets vis--vishuman resources.

Evaluating the expenditure incurred for

imparting further education and trainingto employees in terms of the benefitsderived by the firm.

Identifying the causes of high labourturnover at various levels and takingpreventive measures to contain it.


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Locating the real causes of lowreturn on investment, ie whether itis due to improper or underutilization of physical assets orhuman resource or both.


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2. It helps individual employees inimproving their performance andbargaining power. It makes eachof them conscious of thecontribution that he is makingtowards the betterment of the firm

vis--vis the expenditure incurredby the firm on him.


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3. A financial analyst is interested in

understanding and assessing the innerstrength of firm. Such inner strength

does not merely depend on the physicalasset owned and possessed by the firm.it also depends upon the type of humanresource available to the firm. The

vigilant, dynamic and responsiblemanagement can steer the company wellthrough most adverse and unfavorablecircumstances.


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In case the human resources,specially the managerial resourcesat the disposal of the firm areimpartially and systematicallyvalued and disclosed in the financialstatements, it will be valuable

information for persons interestedin making long term investment inthe firm.


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Objections against HRA

Human beings can not be ownedlike other physical assets. They,therefore, cannot command any

value.

Tax laws not recognize human

beings as assets. Hence HRAremains merely as a theoreticalconcept.


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There is no generally accepted model forvaluation of human resources. The modeof presentation has also yet to be codified.

The valuation of human resourcesdepends on a large number of abstract

factors not measurable in precisemonetary terms. Hence, the valuationlacks objectivity and preciseness.


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INFLATION ACCOUNTING

INFLATION generally refers to theincreasing trend in general pricelevels

. When the general price level rises,each unit of currency buys fewer

goods and services ..


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Limitation of traditional accountingfails to reflect the price level

changes in the financial changes.


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AICPA-Definition

A system of accounting, which purports torecord as a built-in mechanism, alleconomic events in terms of current cost.

It is a system of accounting liketraditional accounting.

It is a method designed to show the effect

of changing cost and prices on affairs of abusiness unit during the course of relativeaccounting period.


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But the difference lies in the process ofmatching cost against revenue.

While the cost in the traditionalaccounting refers to historical cost, ininflation accounting it refers to the cost

prevails at the time of reporting. It has aninbuilt and automatic mechanism tomatch the cost and revenue at currentvalues.


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Salient Features

The inflation accounting has aninbuilt and automatic recordingprocedure.

The unit of measurement is notstable like traditional or historical

accounting.


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It takes into consideration all theelements of financial statements forreporting.


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Need for inflation accounting

In the traditional accounting assetsare shown in the financialstatements year after year on thebasis of acquisition prices or athistorical cost.

During the inflationary period,

historical-cost based depreciationwould be highly insufficient toreplace the existing assets atcurrent costs.


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Items like depreciation, cost ofgoods sold and inventory areunderstated and the profit figure

and financial position of thebusiness units are highly distorted.

Current revenues for the period arenot properly attached with currentcost of operation.


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Hence the problems created byprice changes in the historical cost

based on accounts necessitatessome methods to take care ofinflation into the accounting system.


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Social accounting

Social accounting is a type ofaccounting that a business performsto place a value on the influence itsoperations have on society. Itrequires that enterprises lookclosely at all that it does and what

kind of impact its activities have onpeople, places, and theenvironment.


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Social accounting doesn't deal withthe type of assets that financialaccounting does; rather, it focuseson business behaviors and whatkind of impact that behavior has.
http://www.wisegeek.com/what-is-financial-accounting.htmhttp://www.wisegeek.com/what-is-financial-accounting.htmhttp://www.wisegeek.com/what-is-financial-accounting.htmhttp://www.wisegeek.com/what-is-financial-accounting.htm


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The act of social accountingattempts to put a figure on thecosts and benefits of an enterprise'soperations in relation to society andthe environment. An enterprise maymeasure the impact of its

smokestack emissions on asurrounding region.
http://www.wisegeek.com/what-are-emissions.htmhttp://www.wisegeek.com/what-are-emissions.htm


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A business may measure the impactof its community involvement andcharitable contributions in the cityor town in which it operates. Itcould measure the effectiveness ofits hiring program and whether the

program influences a region'sunemployment rate.
http://www.wisegeek.com/what-are-charitable-contributions.htmhttp://www.wisegeek.com/what-is-unemployment.htmhttp://www.wisegeek.com/what-is-unemployment.htmhttp://www.wisegeek.com/what-are-charitable-contributions.htm


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Social accounting, unlike financialaccounting, looks to understand thecontributions, or lack thereof, thatbusinesses make to society. Itconcerns itself with businessbehavior that contributes to the

well-being of people and the planet


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The identification, measurement,monitoring and reporting of thesocial and economic events of an

institution on society. It is intendedfor both internal managerial andexternal accountability purposes,and is an outgrowth of changing

values that have led society toredefine its notion of a corporationssocial responsibility

National Assessment and Accreditation Council


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Benefits of social accounting

To increase information formanagerial decision making.

More accurate product or servicecost.

Enhanced image, management andpublic relations.


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It helps in identification of socialresponsibilities.

It helps in identification of marketdevelopment opportunities.

It helps in maintaining legitimacy.


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Salient Features of Computerizedaccounting

Fast, Powerful, Simple and Integrated -Computerized accounting is designed to automate andintegrate all the business operations, such as sales,finance, purchase, inventory and manufacturing. With

Computerized accounting, accurate, up-to-datebusiness information is literally at the fingertips. TheComputerized accounting combine with enhanced MIS,Multi-lingual and Data organization capabilities to helpthe company simplify all the business processes easilyand cost-effectively.

Complete Visibility -Computerized accountingsgiving the company sufficient time to plan, increase thecustomer base, and enhance customer satisfaction.With Computerized accounting the company will havegreater visibility into the day-to-day business

operations and access to vital information.


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Enhanced User Experience -Computerizedaccounting allows the company to enter data in avariety of ways which makes work a pleasure.Adapting to the specific business needs is

possible. Accuracy, Speed -Computerized accounting has

User-definable templates which provides fast,accurate data entry of the transactions; thereafterall documents and reports can be generatedautomatically, at the press of a button.

Scalability -Computerized accounting adapts tothe current and future needs of the business,irrespective of its size or style.


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Power -Computerized accounting has the abilityto handle huge volumes of transactions withoutcompromising on speed or efficiency.

For Improved Business Performance-Computerized accounting is a highly integratedapplication that transforms the businessprocesses with its performance enhancingfeatures which encompass accounting, inventory,

reporting and statutory processes. This helps thecompany access information faster, and takesquicker decisions. Computerized accounting alsoguarantees real-time optimization of operationsand enhanced communication.


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ALTERNATIVE WORK IS REST

Happiness by giving but not receiving

Learn every day

No bad day. It depends upon our mind set

Two sides in a coin.

One is failure(50% )

Other is success(50%)

A ti f il l d t

Enjoy whatever you do

Everyone is good

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Branches of Accounting-5th

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