Chapter 1
Introduction
Discussion Questions
1.In the domestic ca, accounting is an information rvice that provides financial information about a domestic entity to domestic urs of that information. International accounting is distinctive in that the entity being reported on is either a multinational company with operations and transactions that transcend national boundaries or involves an entiiy with reporting obligations to readers who are located outside the reporting entity’s country of domicile. lected
2.
3.Advantage: Some might argue that measurement, disclosure, and external auditing are three distinct (although related) process, involving different members of the company. For example, corporate attorneys often are involved in disclosure issues, but ldom intervene i
n measurement issues. The Board of Directors works with the external auditors but not necessarily with the comptroller s office. Thus, discussion of accounting requirements and voluntary accounting choices in different jurisdictions is simplified by focusing on the three components of accounting. Disadvantage: measurement, disclosure and auditing are interdependent, and should not be viewed in isolation of one another. A company choosing to disclo as little as possible, for example, may u accounting measurement approaches that reduce the information content of financial statements, and lect an external auditor who will be relatively lenient in enforcing accounting requirements. One alternative classification might include accounting (measurement and disclosure), and auditing. A cond classification might include financial reporting (annual and interim reporting, regulatory filings) and ad hoc disclosure (press releas, analyst meetings, etc). Any classification is arbitrary, and potentially uful depending on its purpo.北京外国语大学本科招生网
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车次英文5.Factors contributing to the internationalization of the subject of accounting include: the
growth and spread of multinational operations around the world, the phenomenon of global competition, the increasing number of cross-border mergers and acquisitions that occur almost daily, continued advances in information technology, and the internationalization of the world’s capital markets.
6.
7.asdfdInternational trade involves importing and exporting activities. The major accounting issue associated with foreign trade involves accounting for foreign currency transactions. Foreign direct investment, on the other hand, involves conducting operations abroad. This activity expos accountants to a new t of issues that run the gamut from having to consolidate foreign currency accounts bad on diver measurement rules to issues of evaluating the performance of foreign subsidiary managers.
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8.
9.Students will overwhelmingly argue in favor of harmonization. This is probably a good
北京朝阳外国语学校starting point for the cour. After they are introduced to the chapters leading up to Chapter 8, some may no longer feel that harmonization is necessarily the answer to all of their international accounting problems.
10.
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11.Recent developments such as the growth and spread of multinational operations, Internationalization of the world’s capital markets, incread cross border mergers and acquisitions, the phenomenon of global competition and financial innovation have incread reader dependence on foreign financial statements. An understanding of accounting differences and their effect on reported measures of profitability, efficiency, solvency and liquidity are critical if proper decisions are to be made. International accounting issues have become more complex in recent years for veral reasons. Financial transactions are becoming more complex, affecting both national and international accounting. For example, the u of complex financial instruments and developing accounting standards for the exotic instruments has been problematic. Glo
bal financial markets also are becoming more volatile, leading to large changes in ast and balance sheet amounts (such as related to investments) and major sources of income and expen. The related accounting issues are difficult. The growing internationalization of business also promotes complexity. Foreign currency transactions and translation have been troublesome accounting issues for years, and are becoming more important as cross-border business and finance increa. Also, differences in national accounting principles potentially are more troublesome as business becomes more international. However, as convergence efforts worldwide accelerate, and more and more companies and countries adopt International Financial Reporting Standards (IFRS), complexity arising from differences in national accounting principles will decrea.
12.
13.Examples of external reporting issues include:
14.
a. Does translation from one t of measurement rules to another change the information content of the original message?
b. Should accounts of foreign operations be translated to parent currency when consolidated statements are prepared?
c. Which exchange rates should be employed when translating from one currency to another?
Examples of internal reporting issues include:
a. Which exchange rates should be ud for budgeting purpos?星期六英文
b. Should foreign managers be evaluated in terms of parent currency or the local currency of the country in which the manager operates?
c. Which prices should one u when transferring goods or rvices between members
of the multinational enterpri- cost, market, cost-plus or some other metric?
15.Global capital market activities and transactions reach beyond single political or legal jurisdictions. For example, global capital market transactions include the following: (1) an American tourist buying Australian dollars for travel purpos in the South Pacific; (2) a Japane insurance company buying German government bonds as an investment; and (3) a Nigerian agricultural development project receiving cash subsidies from the European Union (EU).
16.
The international equities market is one global capital market. A cond such market covers foreign exchange transactions, that is, when one national currency is exchanged into, traded forward, hedged, swapped, or otherwi converted to another national currency. This market is estimated at hundreds of billions of U.S. dollars per day. The total world foreign exchange market is the largest market on earth. The international bond market is still another global capital market. The bonds constituting this market are under
written by international syndicates of banks and are marketed and traded all over the world. Global capital markets are a vital part of the world economy.
17.English should be designated as the formal international accounting language. Technical accounting terms ( terms of art) do not travel well internationally. Since technical accounting terms often have attributed meanings (for example, generally accepted accounting principles are neither generally accepted nor principles ), it is difficult or impossible to translate the terms into other languages and retain their original meanings. In other disciplines, such considerations have caud the establishment of Latin as the universal language for botanical classifications, Italian as the language for specifying the tempo (and other matters of interpretation) of musical compositions, and English as the language of electronic computing. Since accounting is ud worldwide, a single worldwide language for accounting makes n.
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