Question

Why do different countries have different accounting standards? Explain your answer with suitable example.

Answer 1

For starters, Not most companies have their own Accounting standards, mostly follow the US GAAP.

Also, the Law Makers accross countries are working on making the Standards common. They are now reconciling their standard with international standards.

Although the difference was because in early ages when the accountancy was invented, the communication channel was not that was advance over the globe. So the law makers made the standards on the basis of what came into their minds. Since then, many changes are made in them over the period.

It also depends on the customs & traditions in the country. There are some factors like Pensions, leasing, renting used at high rates in some countries whereas in others people don't trust renting contracts etc, so the standards followed by them may differ.

Example - In a country with Renting & Leasing activities very common, they have standards on who should show ownership of rented/leased asset in their books of accounts. Although where it is not common, it is possible that they may have never thought of showing the Leased asset in the books of Leader.

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