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Accounting Standard Essay

642 words - 3 pages

Country Differences in Accounting Standard
Ashford University
BUS 616: International Business
October 21st, 2013

Country Differences in Accounting Standard
International Accounting Standard Board (IASB) is the standard agreed upon by the European Union for the financial reporting of all publicly traded companies on the European stock exchange (Hill, 2011). The United States currently uses the Generally Accepted Accounting Principles (GAAP), but has aligned some of its principles to those of the IASB (Ernst and Young, 2010). This paper will look at the benefit of adopting the IASB from an investor and business standpoint. The ...view middle of the document...

The IASB specify a format that must be included on income statement and balance sheets. The note must include a description of the nature of the expense with create more transparency regarding the expense which most company would hide under a different heading (Ernst and Young, 2010).
In which nation is the move to adopt the IASB standard likely to cause revisions in the reported financial performance of business enterprises, the United States or China? Why? 
The nation that the IASB will cause a revision in financial performance of business enterprise is China. The U. S. already uses GAAP, which have adopted or aligned itself with most of the governing rules of the IASB. According Hill, (2011), the current Chinese accounting practice tends to give investors a false sense that Chinese firms are financially strong when in fact they are not. The reason for this is the recognition of revenue in the Chinese accounting system for recording raw material, wages, and other direct expense.
The recognition of revenue means that revenue is...

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