Relation of accounting system with society and environment.
A factory is pouring out smoke and the village next door is coughing. Does accounting have anything to say about that? It does. Accounts are not only for counting profit; what a business spends for society and the environment goes into the books too.
1. Not only profit
Accounting is not used merely to find profit. It also contributes towards making sure that a business does not harm society and the environment.
The book's first example is climate pollution. An organization spends money to resist it, and the accountant keeps the record of that spending. Reading the record, you can see how conscious the owner is of society and the environment. Oil refinery companies in particular spend generously to stop air pollution.
The second example is smoke from industry, which is injurious to the environment and to people's health. So the owner and the accountant have three jobs: spend money to prevent the pollution, keep accounts of that spending, and follow the government's rules.
2. Spending inside the factory
The third example sits inside the making of the product itself. Hygienic raw materials, as little electricity as possible, tolerable machine noise and garbage dumped in the proper place each cost some money. Besides allocating funds for this, the accountant must keep a proper record of the money spent. Tap below to see which part belongs to whom.
whose jobtap a chip
The accountant's duty
Management. Setting money aside for the spending is one thing; recording it properly is another.
The accountant's duty. The book's words: besides allocating the fund, the accountant must also make proper records of what is spent.
Both seen. After the allocation comes the record keeping.
3. Spending for society
The fourth example is social commitment. Every business spends some money for society, such as scholarships for poor and meritorious students. It must keep accounts of how much it spent on this over the year.
The four examples in one factory. Turn each spending on: what changes in the factory, and what goes into the accountant's book?
one factoryturn on a spending
Spend it, book it
Now sort the spending from all four examples: which is for the environment, which for environment and health, which for society?
sort themspending, then box
Environment or society?
Pick up an item of spending, then drop it in a box.
Right. Next one.
Not yet. Ask yourself: is it for air, power, noise or garbage, or for people's education?
All in place. Pollution, power, noise and garbage go to the environment, raw material to environment and health, and scholarships to society. Every one of them is recorded.
The scholarship example turns up again and again in exams, so here it is on a card, with the main point of this note on another.
cut from the notetap to turn over
Social commitment
QuestionScholarships for poor and meritorious students are which kind of commitment?
AnswerSocial commitment
QuestionIs accounting only for finding profit?
AnswerNo. It also helps make sure a business does not harm society and the environment.
4. Check yourself
Three questions, straight from the book.
check yourselfpick one answer
Question 1
Which one is a social commitment of a business?
Capital formation is the business's own matter, not a social commitment.
Right. The book says scholarships to poor and meritorious students are given as part of social commitment.
A salary rise is the business's own cost, not for society.
An honorarium is not the book's example of social commitment.
In the second, recognise the example.
check yourselfpick one answer
Question 2
Which one is a social commitment of a business organization?
Using less electricity is an environmental example.
Reducing machine noise is for the environment.
Right. The book says scholarships to poor and meritorious students are a part of social commitment.
Hygienic raw materials are for environment and health.
The last is about the accountant's work.
check yourselfpick one answer
Question 3
Mr. Alam owns a garment factory. A lot of black smoke used to come out of his factory. When he noticed it, he arranged for the smoke not to be emitted. Why will Mr. Alam keep an account of the money spent on controlling smoke?
Showing inflated expense is not the book's purpose.
Right. The book says the accountant must keep proper records of this spending.
Record-keeping is not for show; it is for correct accounts.
Enjoying a benefit is not in the book. The book's answer: To keep the firm's accounts correctly.
The whole section on six cards.
cut from the notetap to turn over
Six cards
QuestionBesides finding profit, what else does accounting contribute to?
AnswerMaking sure society and the environment are not harmed
QuestionWhat does the record of spending on pollution control show about the owner?
AnswerHow alert he or she is about society and the environment
QuestionWhich four environmental measures in making a product does the book list?
AnswerHygienic raw materials, less electricity, low noise, garbage in proper places
QuestionBesides allocating funds, what must the accountant do about this spending?
AnswerKeep a proper record of the money spent
QuestionScholarships for poor and meritorious students are part of what?
AnswerSocial commitment (social responsibility)
QuestionWhat must be kept of the yearly spending for social commitment?
AnswerAn account (record) of it
Source: Accounting, Classes 9-10 (NCTB), Chapter 1 “Introduction to Accounting”, the “Relation of accounting system with society and environment” part.