<p>The growing importance of environmental sustainability has led to increased attention on carbon credits as a market-based mechanism to mitigate carbon emissions. This study explores the impact of accounting practices on the recognition, measurement, and disclosure of carbon credits in companies based in Uttarakhand, India, and how these practices influence their financial performance. By examining a sample of firms across various industries, this research investigates the correlation between effective carbon credit accounting and key financial indicators such as profitability, asset utilization, and market valuation. Using a mixed-method approach, both qualitative and quantitative data were collected through structured interviews with accounting professionals and analysis of financial statements. The study delves into how accounting standards and policies related to carbon credits are applied, and whether clear and consistent accounting enhances transparency and long-term financial stability. The findings reveal that companies adhering to robust carbon credit accounting practices not only improve their environmental footprint but also experience positive financial outcomes, including increased investor confidence and access to green financing. This research contributes to the growing body of knowledge on the intersection of environmental sustainability and corporate financial performance, providing insights for policymakers, regulators, and businesses on how transparent accounting for carbon credits can support both environmental and financial goals.</p>