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Finance & Accounting
Pages 3 (753 words)
Activity 1 Accounting can be useful to determine the negative effects on the earth. Much of the world's resources can be likened to assets. Because of this, these assets must also suffer from depreciation. The problem is that there is not one accepted method to account for the world's natural resources.
Also, there is the problem that no one individual or corporation has full ownership of the earth, so it would be very difficult to account for. Even if some accountants did factor use of the earth into the accounts, there would likely be many more that would not do this. Accountants do have the expertise required because they understand how assets depreciate and also how to balance the economic equation of assets equals liabilities plus equity. If such a system was put in place to allow accountants to value the earth, then it may be possible to do. The major problem is trying to get everyone to agree on what should be accounted for. The accounting profession is suited perfectly to control such measurement functions but the problem is deciding on what those functions are. Because they are many things that cannot be measured, it is very difficult for accountants to include such functions on the balance sheet. The difference between accounting for financial and physical objects is that one type can be measured on a scale while the other is more ambiguous. Financial objects have value because we give values that can be assigned to specific objects. For example, for an investment that loses money, it is easy to track that flow because we can compare the end result with the start value. ...
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