The American Accounting Association’s Committee on Human Resource Accounting (1973) has defined Human Resource Accounting as “the process of identifying and measuring data about human resources and communicating this information to interested parties”. Now human resources accounting is as new branch of accounting. As per tradition accounting system all expenditures viz. recruitments, selection, training, development etc. for human capital formation treat as charge against the revenue. Due to which no physical asset could be created in terms of human resources in the balance sheet. Whereas the concept of human resource accounting states that the expenditure incurred in acquiring any human resource such as the cost of recruitment, selection, training, development etc. should be capitalized. Because it provides measurable benefits in monetary terms. In this paper we will study about the objectives, importance, methods and limitations of human resource accounting.

Keywords: Human Resource Valuation, Return on Investment & Knowledge, Investment Yields.