The Key Factors Leading to GAAP Being Different around the World
Individual Essay One
The Key Factors that Led to GAAP being Different around the World
I. INTRODUCTION
Accounting is a general business language in the world. This “language” is expressed by Financial Statements, which have many different users such as creditors, shareholders, customers, employees, suppliers and so on. Though accounting is a general language, some limitations exist. As we know, Financial Statements should follow some specific GAAP, which established and regulated the accounting system. However, different countries may have diverse accounting systems, according to their own environments. That means the GAAP will be different around the world. In this essay, I will analyze the affecting factors that led to GAAP being diverse and use some examples to support my opinion.
II. FACTORS MAY INFLUENCE GAAP
GAAP are different around the world because of diverse factors, including type and level of economy, history and culture, legal system, stability of currency, level of education, and political system. As we known, the environment will influence accounting system. Nations have different histories, values, cultures, and political and economic systems, and they are also in various stages of economic development. These factors may directly affect the accounting standards or have some indirect effects in a specific country, which will finally result in diverse GAAP in different countries around the world. The followings are some specific examples of affecting factors.
History and culture: The culture means the collective programming of the mind that distinguishes one category of people from another, which will result from the diverse history of the country. The culture of a country influences not only its business practices but also its accounting procedures. Therefore, if the cultures are different, the accounting systems will be diverse, because treatments for the same issue will be various.
Level of Education: There tend to be a direct
The Key Factors that Led to GAAP being Different around the World
I. INTRODUCTION
Accounting is a general business language in the world. This “language” is expressed by Financial Statements, which have many different users such as creditors, shareholders, customers, employees, suppliers and so on. Though accounting is a general language, some limitations exist. As we know, Financial Statements should follow some specific GAAP, which established and regulated the accounting system. However, different countries may have diverse accounting systems, according to their own environments. That means the GAAP will be different around the world. In this essay, I will analyze the affecting factors that led to GAAP being diverse and use some examples to support my opinion.
II. FACTORS MAY INFLUENCE GAAP
GAAP are different around the world because of diverse factors, including type and level of economy, history and culture, legal system, stability of currency, level of education, and political system. As we known, the environment will influence accounting system. Nations have different histories, values, cultures, and political and economic systems, and they are also in various stages of economic development. These factors may directly affect the accounting standards or have some indirect effects in a specific country, which will finally result in diverse GAAP in different countries around the world. The followings are some specific examples of affecting factors.
History and culture: The culture means the collective programming of the mind that distinguishes one category of people from another, which will result from the diverse history of the country. The culture of a country influences not only its business practices but also its accounting procedures. Therefore, if the cultures are different, the accounting systems will be diverse, because treatments for the same issue will be various.
Level of Education: There tend to be a direct