Human Resource Accounting
Masoud Ghorban Hosseini · IOSR Journal of Business and Management · 2012
Human Resource Accounting (HRA) involves accounting for expenditures related to Human resources as assets as opposed to traditional accounting which treats these costs as Expenses that reduce profit.Accountants have recognized the value of human assets for at least 70 years.Human resource accounting is not a new issue in conomics.Economists consider human capital as a production factor, and they explore different ways of measuring in investment in education, health, and other areas.Human resource accounting (HRA) is an attempt to identify, quantify and report investment made in Human resources of an organization that are not presently accounted for under conventional accounting practice.The concept of "investment" in employees; the human capital of the organization, push forward a view that one is looking for a profit to be gained from the investment and therefore the focus is on the development of employees for a specific purpose to gain.Investment in professional training is often treated as an industrial relation activity, and not as an essential investment decision like for the plant or technology.When we consider human assets accounting, the under lined idea is, we are considering the human inventory stock of a company incorporated available to the organization to perform the activities.T he concept of human resource accounting can be basically examined from two dimensions:(I) the investment in human resources; and (ii) the value of human resources.The expenditure incurred for creating, increasing, and updating the human resource quality is known as investment in human resources.Such investment yields fruitful results like higher productivity and higher income to the organization.