Four Internaional Accounting Questions Essay Example | Topics and Well Written Essays - 500 words

Four Internaional Accounting Questions - Essay Example From a creditor’s perspective, they want to be confident that the companies or debt securities their citizens (or the countries themselves) purchase are accurately represented by the published financial statements. 2a. Ever since the onset of modern business and the taxation of corporations, accounting in the US has been rules based. Any major change in the philosophy of accounting will be a challenge. The rules based accounting system dictates exactly how certain transactions should be recorded. The principle based accounting system has few rules. Instead general principles are published and companies are required to ensure their financial statements fairly and accurately represent these principles. I see the main challenge in converting from rules to principles based system will be in the consistency of financial statements. Another challenge will be in educating the investor. Under the principles based system the accountants have much more latitude in the recording of trans actions. For example, depreciation of assets will vary depending on the accountant’s view of useful life.