Accounting Diversity – Evidence, Causes and Problems

July 2022 | 7 pages | ID: A8B790874FF9EN
Sadia Saeed

Abstracts

Diverse rules and regulations are used for making financial reports in various countries according to nature of business and environment of the country. These dissimilarities in regulations standards are known as accounting diversity. For instance, it is required for the companies of USA to record all fixed assets as per historical amounts. On the other hand, the companies in EU use market values for recording fixed assets. In Japan, the expenditures of R&D should be recorded as expenditures, while these are recorded as capitalization amount in Canadian companies. So, various nations use diverse rules and regulations (Collins, 1989). These dissimilarities impact the amounts stated in statement of financial position and statement of profit and loss account. (continued...)wordcount of report:1000 words

Contents

Introduction
Evidence of Accounting Diversity
Real world Example
Causes of Accounting Diversity
Legal Systems
Taxation
Suppliers of funds
Inflation
Political and Economic Ties
Problems happened due to accounting diversity
Preparation of monetary statements
Access to internal capital markets
Comparability of Financial Statements
Lack of High-Quality Accounting Information
References