Question

in your OWN words -

Discuss the different socio, cultural, economic and political factors that shape accounting standards in countries across the world.  How do these factors determine the primary role of accounting and the purpose of financial reporting in a country?

Answer 1

Accounting Standards- These are the rules and regulations through which accounting is done all over the world. These are the main source of GAAP, financial recording and reporting.

Factors that influence Accounting standards- Each country's accounting standards are influenced by some or the other factors. These factors can be same or different in countries. These are as following-

Social and Cultural factors- Accounting standards are influenced by society and culture in that society. Financial transactions are recorded in the nation's currency and accounting books are kept in local language also apart from English.

Political factors- Government policies influence accounting standards. Accounting standards are set according to the political affairs, relations, nature of ownership and type of Government in the country. Government levies taxes at different level so individuals and companies have to show their income after deducting the expenses for taxation purpose. Tax plays a great role in making and upgrading accounting standards.

Economic factors- Accounting standards are influenced by economy of the country, how is the country's growth, people, national income, per capita income, employement, unemployement rate, Inflation, capital markets, economic development and economic relation with other countries etc.

Conclusion- These above factors tell the diversity in accounting practices in the countries. This is true that a country's accounting standards reflect many things so these are set by taking into consideration the above elements.