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I was doing a practice qns on the above topic , in open tutor under ACCA F5 practice qns and came across this qns.
Which of the following environmental a/cing techniques would be relevent when considering the costs of dismantling machines at the end of a project?
the correct answer was : flow cost a/cing
my answer: life cycle costing
could you kindly explain why my answer is incorrect?
thank you and kind regards.
It is a slightly unfair question (although it was an actual exam question) in that all four methods of accounting for environmental costs (including life-cycle costing) will take into account the cost of dismantling machines.
However, of the four, flow cost accounting is the most applicable because it looks at different aspects of the business separately (rather than all together).
Thank you very much John. So am I safe to say that Flow cost accounting could be used as a better technique in environmental mgmt accounting?
In any case, if a theoratical qns of which is a better technique to be used in an EMA qns comes out, would it be sensible to state flow cost accoubring as one of the best / better methods in Accounting for environmental costs?
It is a better technique with regard to the cost of dismantling.
But there are lots of other environmental costs and for them other approaches may be more suitable.
Noted on that. Thanks John!
You are welcome 🙂