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CONVENTIONAL ACCOUNTANCY IS VERY POWERFUL
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Good accounting embraces both P&L Accounts and Balance Sheet Accounts
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Profit and Loss Account (P&L A/C)
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P&L A/C with Balance Sheets
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- The importance of the Balance Sheet and the Profit and Loss Account in conventional financial accountancy cannot be overstated. It makes for clarity and is a powerful way of identifying management misfeasance.
- Its weakness is that conventional financial accountancy ignores everything outside the reporting entity including very important issues relating to the impact there is on social capital and natural capital (the environment).
- Conventional Financial Accounting is central to modern management systems and the determination of the value of a business entity. Cost and management accounting have been very well developed.
- TVM's enhanced accountancy uses many of the same concepts but incorporporates ALL the capitals into an expanded balance sheet and all the impacts into an operating statement that embraces transactions that have social impact and impact on the environment (natural capital).
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