ADVANCED FINANCIAL ANALYSIS AND SOCIAL RESPONSIBILITY

Unit V covers advanced financial analysis techniques and the growing importance of corporate social responsibility (CSR) in accounting.

KEY TOPICS UNDER UNIT V:

• Common Size Financial Statements

• Comparative Balance Sheet and Trend Analysis

• Analysis for Manufacturing, Service, and Banking Organizations

• Human Resource Accounting

• Forensic Accounting

• Accounting for Corporate Social Responsibility

COMMON SIZE FINANCIAL STATEMENTS:

Also called vertical analysis, it expresses each item as a percentage of a base figure (usually total assets or sales). Facilitates comparison across different-sized companies.

COMPARATIVE BALANCE SHEET AND TREND ANALYSIS:

• Comparative Analysis: Compares financial statements of two or more periods

• Trend Analysis: Shows percentage changes over multiple years

• Horizontal Analysis: Shows year-to-year changes

• Useful for identifying growth patterns and performance changes

HUMAN RESOURCE ACCOUNTING:

• Measures and reports on the value of human capital

• Treats employees as assets rather than only expenses

• Helps in measuring effectiveness of HR investments

• Growing importance in knowledge-based organizations

FORENSIC ACCOUNTING:

• Application of accounting principles to investigate fraud

• Combines accounting, auditing, and investigative skills

• Used in legal proceedings and dispute resolution

• Helps detect financial crimes and irregularities

CORPORATE SOCIAL RESPONSIBILITY (CSR):

• Commitment to sustainable business practices

• Includes environmental, social, and governance (ESG) initiatives

• Transparency in reporting CSR activities

• Growing stakeholder demand for corporate accountability