INTERNATIONAL ACCOUNTING CH 2 HW

INTERNATIONAL ACCOUNTING CH 2 HW - International Accounting...

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International Accounting Chapter 2: Worldwide Accounting Diversity 1. What are the two most common methods used internationally for the order in which assets are listed on the balance sheet? Which of those two methods is most common in North America? In Europe? Companies in North America commonly present assets in order of liquidity, beginning with cash; companies in Europe commonly present assets in reverse order of liquidity, beginning with “fixed assets.” 2. What are the 2 major types of legal systems used in the world? How does the type of legal system affect accounting? Code law countries tend to have an accounting law, which is rather general and does not provide much detail. Common law countries, a non-legislative organization generally develops accounting standards, which tend to provide much more detail than is found in the accounting laws of code law countries. 3. How does the relationship between financial reporting and taxation affect the manner in which income is measured for financial reporting purposes? In those countries in which published financial statements form the basis for taxation, there is an incentive for companies to minimize financial statement income so as to also minimize income taxes. This incentive does not exist in those countries in which expenses taken for tax purposes are not required to be recognized in the financial statements. 4. Who are the major providers of capital for business enterprises?
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INTERNATIONAL ACCOUNTING CH 2 HW - International Accounting...

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