4. International Accounting Flashcards
What is harmonisation?
In relation to accounting, refers to a process of increasing the compatibility of accounting practices by setting bounds to their degree of variation.
What is standardisation?
A process that imposes a given set of rules or requirements on a particular item, process or practice. From an accounting perspective it effectively means that every nation applies the same accounting standards.
What is comparability?
A qualitative characteristic of financial information that enables users to identify and understand similarities in, and differences among, items.
What is understandability?
From an accounting perspective, and in accordance with the IASB Conceptual Framework, classifying, characterising and presenting information clearly and concisely makes it understandable. Considerations of understandability require judgments to be made about the proficiency of users of information.
Who is the G7 group?
The G7, or G-7, is a group consisting of the finance ministers of seven industrialised nations: the US, UK, France, Germany, Italy, Canada and Japan.
How did Australia convert to IASB standards?
From the mid 1990’s Australia started harmonising their standards and then in 2002 the FRC decided to adopt the standards by IASB.
What is ‘rules-based standards’?
These provide explicit guidelines on how to account for specific attributes of different transactions and events.
What is ‘principles-based standards’?
Rather than providing detailed rules for particular transactions and events, in principles-based standards reference is made to general principles that should be followed.
What are the 8 cultural dimensions by Hofstede?
Individualism v collectivism Large v small power distance Strong v weak uncertainty avoidance Masculinity v femininity Professionalism v statutory control Uniformity v flexibility Conservatism v optimism Secrecy v transparency
What are the 6 broad cultural differences which influence international accounting?
Religion Legal Systems Business ownership and financing system Taxation Systems Strength of the accounting profession Accidents of history
What is information asymmetry?
A situation where one party in a transaction has access to certain (superior) information that is not available to the other party to the transaction. This is potentially harmful, as one party could take advantage of the other party’s lack of knowledge.
What is Accounting accruals?
An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged. The term ‘accrual’ refers to any individual entry recording revenue or expense in the absence of a cash transaction
What is Masculinity?
Stands for a preference in society for achievement, heroism, assertiveness and material success. Its opposite is femininity.
What is Uncertainty Avoidance?
The degree to which the members of a society feel uncomfortable with uncertainty and ambiguity.
What is Individualism?
Stands for a preference for a loosely knit social framework in society wherein individuals are supposed to take care of themselves and their immediate families only.
