International Accounting

Name : Linda daiubes
Id : 201620118
1) First question
Sources of Finance: In countries with strong equity markets, such as the
United States and the United Kingdom, accounting profits measure how
well management is running the company.
 In source of finance its important to see the efficient of the
management because the united states and united kingdom where
accounting is oriented toward the decision needs of large numbers of
investors and creditors it enable the investors to evaluate
management performance and to predict future cash flows and
profitability .
2) second question
(1) Under the macroeconomic approach, accounting practices are derived

from and designed to enhance national macroeconomic goals.
Macroeconomic pattern with emphasis on economic stability and the

business is based on three propositions:
1. trading company is an essential unit in the national economy

2. trading company achieve its goal through the coordination of activities with
national economic policy
3. public interest is better served if the accounting firm trade is closely linked
to national economic policy
Under the microeconomic approach
Accounting framework is developed based on microeconomic principles

include:
1. Individual company is the focus of business activity

2. The company’s main goal is to survive to continue to live
3. The best strategy is the company to survive the economic optimization
4. As a branch of business economics, and application of accounting concepts
derived from economic analysis
Under the independent discipline approach: Judgment and
estimates are an integral part of business. It is necessary to solve
real-world complexity and uncertainty even ever experienced.
Successful business owners to use intuition and trial (trial and error)
are often the only way to handle changes in business environment.
Businesses generate their own concepts and methods from the
experience and practice. Developing countries accounting as a
discipline is free to the United Kingdom and the United States.
Under the uniform approach : This approach is based on

standardized accounting and administrative controls are used as
tools by the central government. Uniformity in the measurement,
disclosure and presentation of accounting produces reliable
accounting information primarily for surveillance. Uniform approach
is commonly used in State government involvement in economic
planning and accounting is used to measure the implementation,
resource allocation, tax collection and supervision of such strong
prices.
3 third question
Fair Presentation/Full Disclosure Model
It could also be referred to as the British-American model or Anglo-
Saxon or Anglo-American Model, is used to describe the approach
applicable in the United Kingdom and United States, where
accounting is oriented toward the decision needs of large numbers of
investors and creditors. This model of accounting is oriented toward
the decision needs of external investors. Under this model, financial
statements enable the investors to evaluate management
performance and to predict future cash flows and profitability. The
Anglo American Model is characterized by a system of accounting
that is strongly influenced by professional accounting bodies rather
than government, emphasizes the importance of capital markets and
relies upon terms such as fair and true or presented fairly .This model
is used mostly in countries of English-speaking and some other
countries which are heavily influenced by the United States or the
United Kingdom. Common laws also referred to as Case laws are laws
enacted based on court rulings. The major source of fund for this
kind of model is basically the stock exchange market. The financial
market enables ordinary shares and bonds to be exchanged
frequently, hence enabling companies to raise large amount of
capital. These countries also have many large multinational
corporations. Some of the countries using this model outside the
Britain, United States of America and Netherland include Australia,
Mexico, Hong Kong, India, Indonesia, Israel, Kenya, Nigeria,
Philippines, Singapore, and South
Inflation-Adjusted Model
It’s referred to as the South-American model, is found predominantly
in South America. This model is similar to the Continental European
model in its legalistic, tax, and government-planning orientation.
However, this model distinguishes itself through the extensive use of
adjustments for inflation. However, the South-American countries
have a great deal of experience coping with inflation and their
accounting systems have been developed to reflect this
characteristics, which is generally oriented toward the government
planners and uniform practices are imposed on business entities.
Under this model, financial statements are not prepared based on
Historical Cost. Inflation requires extensive modification of
accounting rules
Legal Compliance Model

It’s called the Continental European model, is a type of accounting
model designed to satisfy government imposed requirements as
demonstrating compliance or computing income taxes with the
national government's macroeconomic plan .This model consists of a
variety of countries in which the legal system and the accounting
rules are codified by government ministries. The Central European
system is based on two determinants, (a) accounting controlled by
commercial law, focused on protecting creditors; and (b) tax law
focused taxation. This is the type of accounting system that is
practice in the EU and in most countries in Continental Europe and
Japan where businesses have very close ties to their banks which
supply most capital needed to finance businesses. The primary
source of capital or fund for this kind of model is basically the bank.
Also, in this model, Accounting is not primarily oriented toward the
decision making needs of the capital provider. Rather, it is usually
designed to satisfy such government-imposed requirements as
computing income taxes or demonstrating compliance, with the
national governments macroeconomic plan. This type of accounting
model has developed where governments have used accounting as
part of the administrative control of businesses. Thus, Accounting in
this case can be used to measure performance, allocate funds, assess
the size of industries and resources, control prices, collect taxation,
manipulate sectors of business, and so on
Communist Model
A communist economy is a direct opposite to the market capitalist
economy. Communism, also known as a command system, is a kind
of an economic system where the government owns all of the factors
of production and makes resources allocation decision about what
products and services should be provided. The most important
originators of communist doctrine were Karl Marx and Frederick
Engels. The primary concern for command or planned economy is to
coordinate production to directly satisfy human needs as opposed to
generating. All production resources belong to the people,
represented by the State that manages and controls them in the
name of the people. Under this system, private ownership of
productive resources is prohibited. Communist accounting model is
practiced in China, Cuba, and North Korea where government own all
the productive resources and supply all capital needs. Under this
model, high uniformity in accounting practice is required for tight
central economic control and the primary users of accounting
information are government planners. Financial statements (which
normally include budgetary information) are not prepared for
outside users but for various agency administrators and government
planners. However, there is no concept of fair presentation or true
and fair view in a command economy. Also, there is a very little
emphasis on accountability, which is a crucial element in accounting
of a market-based economy in which managers are delegated with
the control of resources by shareholders of companies who are
granted limited liability in order to encourage investment. In contrast
to capitalist economies, the basic inputs to production in the
Command economies are not purchased nor are output sold on open
markets. Rather, the Government allocates firms a specified quantity
of resources, and firms are expected to produce a predetermined
level of output. Also, under this model, success is not measured by
the amount of income earned; rather the emphasis is on achieving
production quota and no determining production costs. Since there is
no private ownership of productive resources, valuing fixed assets is
not emphasized as much as it is in the capitalist economies. (1997)
observed that Financial accounting as such does not exist; rather
what is regarded as accounting in illustrating the overall accounting
scene in the Communist countries are closer to Management
accounting.

International Accounting

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Name : Linda daiubes

(1) Under the macroeconomic approach, accounting practices are derived

Macroeconomic pattern with emphasis on economic stability and the

1. trading company is an essential unit in the national economy

Under the microeconomic approach

Accounting framework is developed based on microeconomic principles

1. Individual company is the focus of business activity

Under the uniform approach : This approach is based on

Legal Compliance Model

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