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Discuss about the International accounting practice between countries.

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Introduction

I. Discuss about the International accounting practice between countries. Provide relevant justification for: 1. The reasons "WHY" those " Two Countries" practice consistent account system use examples to illustrate 2. Indicate the critical differences in practice across "countries" and provide valuable argument to substantiate their differences. Answer 1: The international convergence of financial accounting standards and practices has emerged as an important issue as companies have become involved in cross-border activities in product and capital markets. Global financial transactions have increased with more companies raising equity outside their home county. Corporations have expanded through investment in foreign subsidiaries and by sales and production activity in foreign markets. Growth in international business activity has highlighted diversity in financial reporting practices. Each country has a reporting framework that reflects its political, legal, cultural and business environment, which may differ from that of other countries and result in the production of financial information that lacks international comparability. It has been argued that greater comparability in information will enable resources to be allocated more efficiently and better investment decisions to be made. Companies may benefit from reduced accounting costs and a cheaper cost of capital, subsequently; International accounting provides economic information about various types of enterprise that is useful for making decisions about resource allocations. Accounting exists because it satisfies a need-in particular, a need for information. And in order to be relevant to the resource providers, accounting information must be responsive to their needs. United Sates is developed country, and China is developing country, those two countries have different rules and regulations to practice there accounting systems, however; the accounting system between those two countries are practice consistently.1 Accounting standards are the rules by which financial statements are prepared, for example the Generally Accepted Accounting Principles (GAAP) that specify the form and content of financial statements. Auditing standards are the rules that govern how the auditor conducts his/her investigation about how well the financial statements conform to GAAP. ...read more.

Middle

United States is the country, which is weak in uncertainty avoidance. Besides that, for a Japanese MNC, a yen total of "cash and cash equivalents" does not represent the amount of yen readily available for transactions in Japan. Portions of the total reflect cash and cash equivalents in other currency denominations, which are unavailable in yen without exchange conversion. And another significant difference is American's source of capital from investors and creditors, developed stock and bond market, so the users expect sophisticated Financial Accounting information. However, banks become source of capital in Japan, and it is legalistic orientation. So government imposed requirement on taxes and economic plan. From the " Environmental Variables in Six Nations"4, it shows that accounting system is also influence by culture and the values that a society shares. Knowing something about a people's values can help us understand their accounting system. Values are defined as a tendency to prefer certain states of affairs over another. For instance, people in the United States value the concept of individualism, whereas in Japan it is not the individual who is important but how the individual among individuals, and group norms are far more important than single individual's opinion or professional judgment. One should not say that the accounting in one country is of better quality than the accounting in another country. Accounting exists because it fulfills a need, and as long as accounting satisfied the needs of its user groups, it is doing what is supposed to do. Accounting develops in and is natured by its environment. That the world is a potpourri of accounting practices reflects the diversity of uses to which it is put. At the same time, some of this diversity is fading. There is pressure for harmonizing accounting around the world II. Critically write a report to the CFO of Microsoft, how the company should consider a proposed take-over of entity in Singapore and another in Japan. ...read more.

Conclusion

For English-speaking users, a barrier to usefulness exists, if the report is not in English or totally in Japanese. So we need to avoid the language problem. Singapore is no barrier for English so this will be not a problem for Creative Company. Terminology Differences in accounting terminology also present a communication problem. Sometimes, terminology will easy for us to misunderstand with the accounting terms with Japan and Singapore. Beside that, the accounting rule and regulation is also different with each other. Finally, environmental boundaries and cost involved are also quite difference. For example, if we invest in Japan we need get the capital from the bank, Singapore's accounting system is similar like our country. However, we need to follow the code law in Japan and prepare the account that the banks required. So base on those complexities concepts of our company we need to avoid those problems, at the same time we need to adapt the differences and problems in order to make better decision-making. If our company (Microsoft) can easily to adapt those complexities between the nations, we believe and have a high confidence that Fujitsu and Creative companies that we going to take over will be making a high profit. Reference: Book: "International Finance Accounting" by by Helen Gernon and Gary K. Meek. 5th edition Internet: "Fujitu-about of us" http://www.fujitsu.com/about/about_index.html "Investors relation" http://pr.fujitsu.com/en/ir/finance/2001/0425-3.html "Product catalog" http://www.creaf.com/products/allproducts.asp "Creative's online privacy policy" http://www.creaf.com/legal/privacy.asp?fr "Pacific-Rim counterparts" www.arborfood.com/reviews/pacific-rim.shtml American Degree Program International Accounting Lecture: Dr Ramesh Submitted by: Zheng Chang Juan (06980) Due date: 24th March 2004 1 "International Finance Accounting" by by Helen Gernon and Gary K. Meek. 5th edition 2 International Finance Accounting" by Helen Gernon and Gary K. Meek. 5th edition page 9. 3 International Finance Accounting" by by Helen Gernon and Gary K. Meek. 5th edition page 27. 4 International Finance Accounting" by by Helen Gernon and Gary K. Meek. 5th edition page 9. 5 "Fujitu-about of us" http://www.fujitsu.com/about/about_index.html 6 "Investors relation" http://pr.fujitsu.com/en/ir/finance/2001/0425-3.html 7 "Product catalog" http://www.creaf.com/products/allproducts.asp 8 "Creative online privacy policy" http://www.creaf.com/legal/privacy.asp?fr= 9 "Pacific-Rim counterparts" www.arborfood.com/reviews/pacific-rim.shtml 1 ...read more.

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