Green Accounting

Q.  Which of the following is/are true regarding Green Accounting?

1) Green accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations.
2) It has been launched in Gandhinagar.
- Published on 14 Nov 16

a. Only 1
b. Only 2
c. Both 1 and 2
d. Neither 1 nor 2

ANSWER: Only 2
 
  • Green accounting is a type of accounting that attempts to factor environmental costs into the financial results of operations.
  • It has been argued that gross domestic product ignores the environment and therefore policymakers need a revised model that incorporates green accounting.
  • The major purpose of green accounting is to help businesses understand and manage the potential quid pro quo between traditional economics goals and environmental goals.
  • Net Domestic Product (NDP) is newly defined as Green NDP, or also known as EDP. The green accounting formula is:
  • EDP = Net Exports + C + NApec + (NAnp.ec - NAnp.n)
    • Where:
    EDP = Environmental Domestic Product,
    C = Final Consumption,
    Nap.ec = Net Accumulation of Produced Economic Assets,
    NAnp.ec = Net Accumulation of Non-produced Economic Assets,
    NAnp.n = Net Accumulation of Non-produced Natural Assets.

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