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ACCA Applied Knowledge · Business and Technology · Environmental and sustainability factors

Karlo Co manufactures ceramic tiles. It records the energy used, water consumed and waste sent to landfill at each factory, converts these into monetary values where possible, and includes them in its management decision-making and cost reports. Which term best describes this practice?

The practice is environmental management accounting. It collects physical data such as energy, water and waste, and where possible the related costs, to support internal decisions and control. It differs from external statutory or integrated reporting because its main purpose is management information rather than publication to outside parties.

  1. AEnvironmental management accountingCorrect
  2. BStatutory financial reporting
  3. CIntegrated reporting
  4. DHuman resource accounting

Explanation

Environmental management accounting identifies, collects and analyses physical data (energy, water, waste) and related monetary costs for internal decision-making. Integrated reporting is an external report on value creation across several capitals, and statutory financial reporting follows accounting standards, so neither fits an internal cost-focused practice.

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