Question

The advantages of understanding accounting as it relates to Human Resource Management

Answer 1

Solution: Human resources are one of the most valuable resources of the organization and it is noteworthy to state that the effective utilization of other resources in the organization like physical resources, and financial resources simply depends on the efficiency of human resources.

This is why there is need to link accounting with human resources in order to know their real value in the organization. If the accounting is linked to the human resources and there will be following advantages:-

(1) Through accounting, we are able to calculate and record the cost incurred on the human resources like recruitment cost, training and development cost etc.

(2) The economic return of the human resources can be calculated and recorded in proportion to their services in the organization as well as the present value of future services expected at different organizational levels.

(3) Through accounting, we can easily identify the actual economic value of the human resources by comparing the cost and returns associated with the human resources in the organization.