In Western Zhou Dynasty time, 3000 years ago, the Chinese Emperor had already built the position to account finance and tax revenue. Until now, accounting still holds an essential role and forms gradually into different branches. Specifically, social accounting is one branch of it, which stands both the macro-level and miro-level to estimate the social finance and income. Nowadays, it is used to effect social and environment, many enterprises like to supply their situation and economic data to the social accounting for the lasting development of the economics and donation as ethical reasonability (Chen & Bouvain 2009). This essay will show the definition of social accounting, how do people use it and how do organisations use it to earn benefit via using social accounting. The purpose of it is to study the social accounting and understand that using it also can receive profit for multinational organisations. This essay aims to prove that social accounting is an advanced tool in the further and increasing multinational organisations are using it.
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The definition of social accounting
In this age of change, accounting has been growing rapidly for the huge improvement of society. Therefore, the presence of social accounting, which constructs the relationship between accounting and business, is inevitable. While what is the meaning of social accounting? It is the component of accounting and the application of it is national income accounting (Belkaoui 1984). Authorities are able to address the impact of corporations on environment via using the channel which established by social accounting. On the other hand, social accounting also called social responsibility accounting. It is obviously that social accounting focus on the ethic and has the duty to protect the environment, which means it has the obligation to improve the quantity of citizens' life. It always studies on the term of nature resource, human resource and pollution. It is true that more international groups are interest in this accounting and want to do the responsibility to global (Shulman 1971).
According to Robert 'article, he summarised several benefits that organisations could received when using social accounting.
- It would promote and appeals corporations a long-run business.
- The organisations could control the human resource and natural resource information.
- It would create a hidden profit for corporations.
How do the multinational organisations get the benefits via using the social accounting?
It is commonly believed that multinational organisations pay a key role of global market. To combine the definition and the features of social accounting, this essay will reveal how the multinational organisations earn the advantages through using it.
In the first place, social accounting can promote and appeal international firms a long-run business. As we know, the main work of social accounting is to account and statistic national income and it is exactly the key point whether a multinational corporation to be successful or not in other countries. This is because before running a business in a new place, marketing is quite imported which study the place, the price, promote and product. Social accounting shows multinational corporations clear data of national income. In this way, the company can define the price of the product associate with the national income and produce the satisfy goods to that country's citizens. Therefore it becomes more convince for international firms and protect them a long-run business.
In the second place, social accounting can help multinational corporations know about local culture and human' habit. The companies should measure the how resource affects on the society when they produce a new good (Business Impact 2000). Taking MacDonald's, an international company and run the business in many countries, as an example. This company have opened a lot of fast-food restaurants in other countries, such as Chinese, Australia and Canada and want continue to broad its market. Until now, McDonalds' have already opened 27 multiple shops in India. However, it had not optimistic trend in India as good as in other countries at the begging. Because Indian do not eat the beef hamburger for cows were regarded as sacred animals. For this reason, McDonalds' developed new chicken hamburger and pork hamburger which were accepted by Indian at last. Through this issue, it is worth thinking about what is the result if McDonalds' do good social accounting at first. It may be earn more profit than today. It may be open more shops in India.
Always on Time
Marked to Standard
Additionally, social accounting also contains the hidden profit. In fact, social accounting means the social responsibility accounting, which focus on many aspects, such as human rights, corporate ethics and environment (Moir 2001). All of which have the same purpose to improve our quantity of life. Actually, it is non-profit work, while it contains the hidden profit as well for the organisations which contribute to the society are welcomed and customers prefer to consume in this companies. Therefore, in this reason, the multinational corporations should make more contribution to the society.Social accounting practice
Social accounting matrix (SAM) is the measure of using social accounting. However, in fact, it is difficult to practice. SAM is a data system to shows the information between the production and income (Santis & Roberto & Ozhan 1997). According to the article 'Social accounting matrix for Turkey', it indicates that collecting information is hard work due to which required records individual income.
- Belkaoui, A 1984, Socio-economic accounting, Greenwood press, Westport.
- Business Impact 2000, Winning with integrity: a guide to social responsibility, Business in the Community, London.
- Chen & Bouvain 2009, 'Is corporate responsibility converging? A comparison of corporate responsibility reporting in the USA, UK, Australia, and Germany', Journal of Business Ethics, Vol. 87, P299, Viewed 10 January 2010, Proquest database, item: 1680512421.
- Moir, L 2001, 'What do we mean by corporate social responsibility? ', Corporate Governance, Vol. 1, no. 2, P16-17, Viewed 10 January 2010, Proquest database, item: 77138121.
- Santis, Roberto & Ozhan 1997, ' Social accounting matrix for Turkey 1990' , Economic Systems Research, Vol. 9, no.3, p281, Viewed 10 January 2010, Proquest database, item:23597271.
- Shulman, James & Gale 1971, Society, Social Accounting for Corporate Managers, Massachusetts institute of Technology.