Which of the following statements is true regarding the social responsibilities of a business in the context of accounting?

• A. Managerial accounting is solely concerned with external reporting of social responsibility activities.
• B. Social responsibility accounting involves reporting on a company's impact on society and the environment.
• C. Financial accounting focuses primarily on measuring a company's social and environmental impact.
• D. Tax accounting requires companies to disclose their social responsibility initiatives in tax returns.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the concept of social responsibility accounting. Social responsibility accounting refers to the process of reporting on a company's impact on society and the environment. It is a broader aspect of accounting that goes beyond financial metrics to include non-financial information related to sustainability and ethical practices.
2. Step 2: Clarify the role of managerial accounting. Managerial accounting primarily focuses on internal decision-making and does not solely concern itself with external reporting of social responsibility activities. It is used to provide information to managers for planning, controlling, and decision-making purposes.
3. Step 3: Examine the scope of financial accounting. Financial accounting is primarily concerned with preparing financial statements that reflect the financial performance and position of a company. It does not focus on measuring a company's social and environmental impact, although some companies may voluntarily include such information in their reports.
4. Step 4: Analyze the role of tax accounting. Tax accounting deals with compliance with tax laws and regulations. It does not require companies to disclose their social responsibility initiatives in tax returns, as these are not typically relevant to tax calculations.
5. Step 5: Identify the correct statement. Based on the analysis, the correct statement is: 'Social responsibility accounting involves reporting on a company's impact on society and the environment.' This aligns with the definition and purpose of social responsibility accounting.