Chapter 4

Question 1

EMA

Answer 1

EMA means gathering and analysing of both financial and non-financial information to help a business make better decisions about protecting the environment.

Identify environment-related costs and steps to control them.

Question 2

Conventional costs

Answer 2

Cost of raw materials and energy that is identified by costing system but not classified as environmental costs

Question 3

Hidden costs

Answer 3

Hidden with overheads

Compliance with environmental regulations.

Question 4

Contingent costs

Answer 4

Incurred in the future

Question 5

Reputation costs

Answer 5

Harming the environment causes loss of reputation, which causes sales loss, marketing costs to repair reputational damage

Question 6

Prevention cost

Answer 6

Cost incurred to prevent environmental harms

Question 7

Detection cost

Answer 7

To detect environmental impact (environmental reporting)

Question 8

Internal failure cost

Answer 8

any cost incurred to manage environmental impact (recycle, waste management)

Question 9

external failure cost

Answer 9

any cost incurred for not managing environmental impact (penalty, legal action, reputation cost)

Question 10

EMA is important

Answer 10

• Increase profile of environmental issues
• increased reputation, litigation or financial risk caused by poor behaviour
• concern that conventional acctg and information systems do not identify or control environmental costs
• environmental mgt is a key component of total quality management (avoidance of waste)