U.S. and International Accounting

Paper Summary:

The author explains why standardization in global markets must occur which will result in increased international investments. This paper examines the different accounting methods and theories in various countries and compares them to the U.S. accounting system. The author goes on to rationalize that to maintain a semblance of order and understanding, there has been a constant effort to come up with a harmonious "language" and set of standards that would cover all the nations involved in the economies of the world.

From the Paper:

"The two major reasons that standardization must occur is the increased amounts of international investments, and global financial markets. This is a far more intricate movement than a company's moving production to a "sweat-shop economy". We are now seeing joint ventures, mergers and acquisitions, as companies position themselves for the 21st Century, including the new "euro" currency for the European union, and the problems which need to be handled in South East Asia, as well as the opportunities looming in China, which still has its Most Favored Nations Status, thus encouraging American firms to invest, create joint ventures, and even build their Sino-American subsidiary plants and distribution centers. So, as an example, how is accounting to be handled in such cases? Through American or Chinese accounting methods? The simplistic answer, of course, is to create a unified system."

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