Introduction
Almost 3,500 years ago, the Israelites, who had just emerged from Egyptian slavery, were given a Law on Mount Sinai, which Jews and Christians consider revealed by God. It went down in history as the Law of Moses; this law determined not only the socio-economic relations of the Old Testament Israel but also the Christian economic system. According to the Law of Moses, the whole earth belongs to God; based on this, the financial system as a whole was built.
Cost Accounting and Ethical Dilemmas
Production costs are accounted for to understand which goods, works, and services are profitable to produce, where money can be saved, how the cost price is formed. The biblical cost accounting takes place according to how property is acquired and used (it can become good or evil). An ethical dilemma is a unit of analysis of the normative ethics of business. Any situation of interest to business ethics is a situation of choice between adhering to the rules of morality or getting more profit. According to the Bible, intentional violation of moral laws in the legal sphere is a sin and a contradiction to the will of God (Dornyei, 2018). Therefore, even in doing business, when solving economic dilemmas, one should be guided primarily by the need to subordinate to God’s law.
Cost Analysis and Estimation
Cost analysis in the context of economic elements provides an opportunity to assess changes in production organization, establishing the impact of the technical process on the cost structure. When analyzing costs, the Bible recommends paying particular attention to the wages paid to employees: “And you, gentlemen, treat your slaves fairly and with dignity, remembering that you also have a Master in heaven” (Col. 4:1). When estimating the costs, their tenth part should be calculated and given to charity: “Bring the tithe to the storehouses in its entirety so that there is food in My house” (Mal. 3:10).
Product, Services, and Job Costing
The product, services, and job costing are made according to different methods, depending on the field of activity. The cost price parameter shows how much money the manufacturer will spend when fulfilling orders. The increase in profit and profitability directly depends on the cost reduction. Nevertheless, the Bible does not recommend reducing product, services, and job costing: “One pours generously, and more is added to him, and another is overly frugal, and yet gets poorer” (Pr. 11:24). Thus, a person can generously share and invest their financial and other funds, making them even more prosperous.
Process and Activity Based Costing
Process and activity based costing imply methods for calculating production costs, the cost of finished products, the amount of work in progress based on cost calculation. There are several ways to calculate an outcome, which involve computing production costs, the cost of manufactured goods, and the volume of work in progress. The Bible does not give preference to any particular costing method. In Ecclesiastes 5:18 it is written: “And if God has given any man wealth and possessions, and has given him the power to use them and take his share and enjoy his labors, then this is a gift from God.” Consequently, all the entrepreneur’s property, processes, and activities are given to them by God. Nevertheless, they are in temporary use by a person to learn how to dispose of them wisely.
Cost Management and Allocation
To obtain reliable information about the financial results of various types of enterprise activities, it is necessary to objectively and accurately determine the costs associated with each of them. The bulk of the analytical work falls on cost management and allocation. Of all the possible classifications of the expenses for assessing the profitability of individual business areas (as well as personal goods and services), the type of direct and indirect costs is relevant. The measure of allowable expenses in the Bible is considered to be actual needs (Coomber, 2018). Therefore, when implementing cost management and allocation, it is necessary to remember that everything that crosses this border is abuse. The use of earthly riches also determines their actual value; cost management and allocation are ineffective if they are not used according to the law of God.
Management Control Systems, Planning and Budgeting
Management accounting helps companies to systematize, collect and combine information; it includes planning, monitoring, and analysis of reports. Budgeting in management accounting is responsible for planning through the development of a system of budgets. It differs for each enterprise and depends on the specifics of the company and its financial capabilities. Budgeting plays a vital role in the management accounting system and the overall activities of the company.
The Bible prescribes to base financial planning on trust in God. The decree on the Sabbath year required the Israelites to have genuine faith in God. If there was no agricultural work in the seventh year, then there could not be a harvest in the eighth. With the exact fulfillment of the commandment before the Sabbath year, the Lord will send so much harvest (finance) that it will last for three years (Lev. 25: 21-22). If it is possible to allocate more funds to a God-pleasing activity when distributing finances, it is worth doing this since the Lord will help with costs.
Business Unit Measurement and Transfer Pricing
Measuring a business unit involves comparing services with other providers in the market on an everyday competitive basis. Transfer pricing is the setting of transfer prices, which differ from market prices, for transactions between interdependent persons, usually belonging to the same holding. When measuring a business unit, the Bible prescribes competition based on the principles of Christian morality. The criterion of success in conditions of inequality is to bring more benefits, give more, and not consume more. The Bible has a positive attitude to transfer pricing since, in this way, cooperation replaces competition (Hettihewa et al., 2019). Competitive thinking distracts from thoughts about the Great Commission, so a joint discussion of market goals gives more opportunities to focus on the production of public goods.
Variance Analysis and Capital Investment Decisions
Conducting control and analytical procedures involves the analysis of emerging deviations. The purpose of this analysis is to identify the reasons why the variations occurred. In the Bible, it is considered as a process as much material as spiritual (Lanen et al., 2013). Control and analytical activity are equated to labor and are defined as creative activities of intelligent beings having the highest spiritual and moral character. Capital investment analysis is critically important for creating value in the financial management system. One of the main tasks of capital investment budgeting is to manage uncertainty, which is a decisive factor when making capital investment decisions. When making a decision, the Bible prescribes to be based on the principles of the value of earthly wealth (Yost et al., 2019). The Church fathers invariably evaluate economic relations by the criterion of serving people, and not their interests and their spontaneous struggle. Therefore, the decision on capital investment should be fundamentally subordinated to these relations of the system of moral duties.
Conclusion
Christian teaching pays attention not only to spiritual and moral issues. It also directly interferes with the daily economic activities of people. The Bible authorizes the relations of property, possession, a specific type of property relations, blessing some types of economic activity, and condemning others. It forms spiritual incentives for economic activity and moral criteria for financial behavior in society.
References
Coomber, M. J. (2018). Religion and globalization. Journal of Religion & Society, 16(9), 92-108.
Dornyei, Z. (2018). Progressive creation and humanity’s struggles in the Bible: A canonical narrative interpretation. Pickwick Publications.
Hettihewa, S., Kopp, K. S., & Wright, C. S. (2019). Ethics/virtues and consequences: An exploratory study of regional small businesses in developed and emerging countries. International Journal of Business and Economics, 18(1), 17-40.
Holy Bible: New living translation. (2006). Tyndale House.
Lanen, W., Anderson, S., & Maher, M. (2013). Fundamentals of cost accounting. McGraw-Hill Education.
Yost, P. R., Terrill, J. R., & Chung, H. H. (2019). An economy of abundance: From scarcity to human potential in organizational and university life. Journal of Applied Business & Economics, 21(7), 182-200.