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Human Resource Accounting: By-Madhu Priya Mba (Abm) - 02

This document provides an overview of human resource accounting (HRA). It begins by defining HRA as the application of economic and accounting concepts to personnel management and the systematic recording of human resource transactions. It then discusses the need for HRA in making decisions around policies, cost reduction, training, and other areas. The objectives of HRA are outlined as determining return on investment in human resources and providing quantitative information to managers and investors. The document also describes the two major methods of HRA as human resource cost accounting and human resource value accounting. Finally, it notes some advantages like assessing training benefits and return on human resource investment, as well as some disadvantages such as the difficulty of valuing human assets and potential divisions among employees.

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Ráhúl Kùmàr
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35 views

Human Resource Accounting: By-Madhu Priya Mba (Abm) - 02

This document provides an overview of human resource accounting (HRA). It begins by defining HRA as the application of economic and accounting concepts to personnel management and the systematic recording of human resource transactions. It then discusses the need for HRA in making decisions around policies, cost reduction, training, and other areas. The objectives of HRA are outlined as determining return on investment in human resources and providing quantitative information to managers and investors. The document also describes the two major methods of HRA as human resource cost accounting and human resource value accounting. Finally, it notes some advantages like assessing training benefits and return on human resource investment, as well as some disadvantages such as the difficulty of valuing human assets and potential divisions among employees.

Uploaded by

Ráhúl Kùmàr
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Human Resource

Accounting

By- Madhu
Priya
MBA (ABM) 02

Contents

Introduction HRA
Need of HRA
Objective of HRA
Method of HRA
Advantage of HRA
Disadvantage of HRA

Introduction
HRA is the branch of managerial accounting
which involves the application of economic and
accounting concept to the area of personnel
management.
HRA is the systematic
recording of the transaction relating to the value
of human resource.

Need of HRA
HRA is more concerned with the decision
making area of accounting. The information
generated through HRA can be of upmost help
for main decision in following area Formulating policies and programmes for the
development of human resource.
Decisions
regarding
cost
reduction
programmes

Training and development.


Recruitment and selection.
Manpower planning and control.
Conservation and reward of human resource.
Making a choice between various types of
human investment and investment in other
asset etc.

Objective of HRA
HRA helps in determining the return on investment on
human resources.
It help in knowing whether the human resources have
been properly utilized or not.
It provides quantitative information on human resource
which will help the managers as well as investors in
making decisions.
Another object of HRA is to communicate the worth
of human resource to the organization and the society at
large.

Method of HRA
There are two major aspects of HRA1. Human Resource cost Accounting- It may be
defined as measurement and reporting of the
costs incurred to acquire and develop people as
organizational resources.
2. Human Resource Value Accounting- HRVA is
based on the view that difference in present
and future earning of two similar firm is due to
the difference in their human organization.

Advantage of HRA
Human Resource accounting will give the cost
of developing human resource in the business.
The investment on the development of human
resource can be compared with the benefit and
results derived.
The return on investment can realistically be
calculated only when investment on human
resources is also taken into account

It will help management in planning and


executing personnel policies.
It can be seen whether the business has made
proper investment in human resource in term
of money or not.
It will help in improving the efficiency of
employees.

Disadvantage of HRA
It is not easy to value the human asset in an
organization.
Human life itself is very uncertain, thus valuing them
under uncertain seems improper and unrealistic.
HRA may lead to divisions among the ranks of
employees.
There is always a threat of opposition from the trade
unions , who may fight such malpractices on the part
of management.

THANK YOU

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