Short Notes — Ch 20 Social Accounting
⚡ Ch 20 — Social Accounting
PYQ: 0 in the FAA papers — but it is in the JKSSB syllabus, and the older Accounts Assistant (Finance) paper asked it twice (social accounting founder + classification). MCQ bank: ~4 questions (in the mixed block Q288–300, incl. CSR at Q292–293). Tier D — skim. Learn the definition, the CSR facts and the objectives. 20 minutes, no more.
1️⃣ The core
Social Accounting = identifying, measuring and reporting the SOCIAL COSTS and BENEFITS of an organisation's activities to society.
It is the accounting expression of a company's social responsibility — communicating the social and environmental effects of its economic actions to interest groups and to society at large.
Also known as: social & environmental accounting · social accountability · corporate social responsibility (CSR) reporting · non-financial reporting.
Why it arose: heavy industrialisation brought prosperity and social/environmental problems, so companies were pushed to invest in social activities to offset the adverse effects.
2️⃣ 5 Features
- An expression of the company's social responsibilities
- Relates to the use of social resources
- Emphasises the firm ↔ society relationship
- Determines the desirability of the firm in society
- Application of accounting to the social sciences
3️⃣ 4 Objectives
| Objective | Meaning |
|---|---|
| Effective use of natural resources | is the firm using resources properly? |
| Help to employees | education for their children, transport, good working conditions |
| Help to society | offset pollution — plant trees, build parks and hospitals |
| Help to customers | better quality at lower prices |
4️⃣ Benefits
- The firm fulfils and demonstrates its social obligations
- Counters adverse publicity and criticism
- Assists management in framing policies
- Proves the firm is not socially unethical
5️⃣ ⭐ CSR — the most likely question
| Point | Answer |
|---|---|
| ⭐ CSR is under which section of the Companies Act, 2013? | ⭐ Section 135 |
| India's rank in CSR implementation | ⭐ 1st (first country to make CSR mandatory) |
| CSR spend requirement | 2% of average net profit of the last 3 years |
| Applies to companies with | net worth ≥ ₹500 cr or turnover ≥ ₹1,000 cr or net profit ≥ ₹5 cr |
Social Accounting = measuring & reporting social costs/benefits Social Audit = independently verifying the social performance (Ch 21) CSR = the actual spending/activity mandated by Sec 135
6️⃣ High-frequency MCQ traps
| MCQ | Point |
|---|---|
| Q292 | ⭐ CSR = Section 135, Companies Act 2013 |
| Q293 | ⭐ India is 1st in CSR implementation |
| Q304 | Human Resource Accounting is a branch of accounting |
| Q303 | Root cause of financial accounting = stewardship accounting |
Two social-accounting questions appeared there: the founder/originator of social accounting, and its classification (income, product, expenditure). The book covers objectives and benefits but not the founder — if you see a name-based question, it is likely outside this book.
7️⃣ If you remember nothing else
Social accounting = measuring & reporting SOCIAL COSTS and BENEFITS · arose from industrialisation · CSR = Section 135 of the Companies Act 2013 · India ranks 1st in CSR implementation · 2% of average net profit of 3 years · Social Accounting = report · Social Audit = verify · CSR = spend
🔗 Related
- Full notes: L-20-SOCIAL ACCOUNTING · related chapter: L-21-SOCIAL AUDIT · MCQs Q292–293 in MCQs
- Prev: SN-19-Financial-Audit · Next: Ch 21 — Social Audit (pending your go-ahead)
