International accounting Frederick D. S. Choi Gary K. Meek Chapter 2: Development and Classification

Learning objective: 1. Identify and understand the importance of the eight factors that have a significant influence on accounting development. 2. Understand the four approaches to accounting development found in market oriented Western economies and identify countries in which each one in prevalent. 3. Have a basic working knowledge of accounting classifications and how they compare with one another. 4. Explain the difference between the “fair presentation” and “legal compliance” orientations of accounting and identify nations in which each is prevalent. 5. Explain why distinctions of accounting at the national level are becoming blurred.

Why should we want to know how and why accounting develops?

DEVELOPMENT factors have a significant influence on accounting development. 1. Sources of Finance. 2. Legal System. 3. Taxation. 4. Political and Economic Ties 5. Inflation 6. Level of Economic Development 7. Educational Level 8. Culture (1) individualism, (2) uncertainty avoidance, (3) power distance, and (4) masculinity.

Four Approaches to Accounting Development (1) Under the macroeconomic approach, (2) Under the microeconomic approach, (3) Under the independent discipline approach, (4) Under the uniform approach,