Companies are increasing day by day in this business world and it creates many employment opportunities. So the human resource accounting has become an important part of accounting. So please tell about need and importance of Human Resource Accounting?
Basically human resource accounting (HRA) is a information system that tells management what changes are occurring over the time to the human resource of the business. HRA also involves accounting for investment in people and their replacement cost; it also involves economic value of people in the organization. It is a process of identifying and reporting the investment made in human resource of the organization that is not accounted for in current conventional accounting system.
The adoption of system of human resource accounting discloses the value of human resources. It helps the management in employment and utilization of human resource. It helps in deciding transfer, training and retrenchment of human resource. Now the question comes in mind that, how the human resource accounting will do that?
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