Question

Explain 5 of the factors that have a significant influence on accounting development

Answer 1

Answer :

Factors affecting the Development of International Accounting.

there are 8 (eight) factors that influence the development of international accounting, namely:

1. Sources of funding
In countries with strong equity markets, accounting has focused on how well management runs the company (profitability), and is designed to help investors analyze the future cash flows and related risks. Instead, the credit-based system in which the bank is the main source of funding, accounting has focused on the protection of creditors through conservative accounting measurements.

2. Legal System
The western world has two basic orientations: the legal code (civil) and common law (case). In code law countries, law is a complete group that includes the provision of accounting rules and procedures that are incorporated in national law and tend to be very complete. In contrast, common law developed on a case by case basis without any attempt to cover all cases in which a complete code.

3. Taxation
In most countries, tax rules effectively set the standard because the company should record revenue and expenses in their accounts to claim it for tax purposes. While a separate tax and financial accounting, tax rules sometimes require the application of certain accounting principles.

4. Politics and Economics Association

5. Inflation
Inflation causes the distortion of historical cost accounting and affect the propensity (tendency) of a State to apply the changes to the accounts of the company.

6. Levels of Economic Development
These factors influence the types of business transactions are conducted in an economy and determine what is most important.

7. Level of Education
Standard accounting practices are highly complex would be useless if misunderstood and misused. Disclosures about the risks of derivative securities will not be informative unless it is read by the competent authorities.

8. Culture
Four dimensions of national culture, according to Hofstede: individualism, power distance, uncertainty avoidance, masculinity.