Both Financial Accounting and HRA are essential aspects for every company today. Nowadays, many businesses realize that this practice needs to change. There is a rising acceptance of the critical role. That employees play in the financial success or failure of an industry or business.
Accounting Approaches:
If we want to know the differences between them, we first have to understand what the approaches are.
HRA (Human resource accounting)
Recognizing and standardizing data about human resources. And communicating this information to interested teams or parties. It refers to accounting for individuals as an industrial treasure. The value of this accounting is not reported in the profit and loss account. And balance sheet, the important act of management on human assets cannot get realized.
Financial Accounting
This accounting is the most specific. As well as a valuable branch of accounting. It includes many things such as – summarising, recording and reporting the myriad of transactions resulting from business operations over some time (etc.). The work opportunities for a financial accountant can found in the public and private sectors. This accounting utilizes a series of established accounting principles.
Objectives of the accounting approaches:
Human resource Accounting
This accounting approach may provide cost value information. About acquiring and helps to develop, divide and maintain human resources. And finding decadence or prosperity among human resources. This accounting process helps to assist in the effective use of manpower.
Financial Accounting
his accounting approach follows either the accrual basis or the cash basis of accounting. Nowadays, non-profits, corporations, and as well as small businesses use financial accountants more.
Difference Between Human Resource Accounting and Financial Accounting
– Human resource accounting manages the workflow in any organization. But, financial accounting helps maintain the record of monetary transfer.
– HRA related to decisions about people. Based on an improved information system & financial accounting related to
- Revenues
- Expenses
- Assets
- Liabilities
- Equity
– HRA helps to enhance managerial awareness of the value of human resources. Financial accounting helps to manage revenues. And expenses accounted for and also reported on the income statement.
– HRA helps to understand the efficient use of human resources and to know the evil effects of labour. Financial accounting may balance sheet utilised to report ownership of the business profit.
Conclusion:
According to many marketing experts, these accounting approaches are very different from each other. But still, if they work together, their working capacity enhanced. When it comes to accounting services, it is always a better idea to outsource your accounting services. The reason behind is simple, it helps in having experts carry out these services. Moreover, you not only save cost of hiring in-house team. But you also end up saving a lot of time.
The same time can be used by the company experts on something which is truly important to them. Which is to focus on their core services indeed. This is why firms are now looking forward for outsourcing such services.
