Question

What are the main differences between "traditional"accounting and sustainability accounting?

Answer 1

Traditional Accounting and Sustainability Accounting are the two methods of accounting. Traditional accounting is a tool used for internal decision making and helps in making new policies. Apart from this Sustainability Accounting is used to create value among its shareholders. Following are the differences between Traditional and Substainability accounting.

Sustainability Accounting

It is another method of accounting in which the disclosure or inclusion of non-financial information about a firm's performance. It gives more important to the environmental and social impact going to be happened with respect to the company. It is made as a part of Corporate Social Responsibility (CSR). It is also known as Social accounting,Corporate social reporting, Environmental accounting, etc... This method is used by the companies to become more sutainable and socially responsible. It includes the activities which are directly influence the society.

There are so many advantages for this method and it includes Competitive Advantage, Management of risk, Increase company reputation. Company can achieve competitive advantage by replacing the unsustainable costs practices by sustainable solutions. And this also helps to reduce the risk and uncertainity. It gives more importance to society and its benefits. So, it will increase the company reputation.

Traditional Accounting

It is otherwise called Conventional accounting. It is the method of accounting used by the allocation of production overhead cost to the products produced. Traditional accounting records all the transaction only in financial nature. Apart from sustainability accounting, it requires only small amount of investment. Also it is prepared by calculating the profits based on the money the company spent and recieved. It is always based on money or cash and the non-financial items are not included in traditional accounting.

Above are the main differences between Traditional and Sustainability accounting.