Human Resourse Account

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Date Submitted: 10/31/2013 06:48 AM

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Human Resource Accounting

It is a known fact that success of an organisation depends on the quality, calibre and character of the people-working in it. Employees are, thus, the greatest asset of an organisation and the successor failure depends on the skill and the performance of the employees, In spite of the vast physical resources and the latest technology, an organisation finds itself in the midst of financial crisis if it does not have the right people to manage and conduct its affairs, Thus, human resources is a very valuable asset without which an organisation cannot progress in all directions

Human Resource Accounting is receiving so much attention inrecent years because of the following two reasons:

(i) Developments in modern organisation theory have made it apparent that there is a genuine need for reliable and complete information which can be used in improving and evaluating the management of human resources.

(ii) The traditional framework of accounting is in the process of being expanded to include a much broader set of measurement than was thought possible or desirable in the past.


Human Resource Accountingis a new branch of accounting. It- is based on the' traditional concept that all expenditure on human capital formation is treated as a charge 'against the revenue of the period as it does not create any physical asset. But nowadays this concept has changed and the cost incurred on any asset (as human resources) should be capitalised as it yields benefits measurable in monetary terms.

Human resource accounting means accounting for people as the organisational resources. It is

the measurement of the cost and value of people to organisations. It involves measuring costs incurred by private firm and public sectors to recruit, select, hire, train and develop employees and judge their economic value to the organisation.

Human Resource Accountingis the art of valuing, recording and presenting...