What is Western accounting?

Western accounting concerns accounting methods and procedures used in countries of the most serious countries, unlike those that are further east. In general, Western accounting is based on rules. This is proven by two dominant sets of Western accounting standards, generally acceptable accounting directors (GAAP) and international standards of reporting of the fair (IFRS). Codes have many similarities, but also many differences. At worldwide pressure, these codes have been unified into one standardized set of accounting rules that everyone can use, including businesses in Eastern countries. This will bring financial statements that financial advisors can understand worldwide.

Accounting rules and regulations differ from country to country, but are closely related to the types of governments from which they develop. The United States and many Western European countries such as England have in A.Rea the government. Many of the governments of these Western countries have some involvement in how businesses are operated through accountantsrules, but they do not have absolute control. The United States has a council for fair accounting standards (FASB) that creates a statement of FASB, which includes US GAAP. European rules come from the Council of the International Accounting Standard (IASB) in the form of IFRS codes. Together they are the US GAAP and IFRS most complete codes in Western accounting.

In order to standardize two FASB and IASB accounting codes in 2002, they announced that they would work on their convergence. Accounting codes have already had much in common. For example, if GAAP had a statement for a certain accounting practice, it was likely that IFRS also had a standard. Although the accounting problems may be the same, the real rules could be in them. As an example, take the topic of long -term construction contracts. Within the US GAAP, these projects could be counted as a percentage of completion method or by reporting only after 100% completed. Within IFRS Je necessary percentage of completion method, forcing society to estimate losses or profits and then report estimates. The difference between the two methods may be enough to create potentially huge differences in the financial reports of a construction company carrying out long -term contracts.

, such as these, have caused many to feel that the US Gaap and IFRS were sufficiently different to cause confusion by attempts to understand foreign financial statements. The ability to understand the company's financial statements is essential for those who analyze it for their value as potential investments. Although the country has historically reluctant to give up their specific accounting methods, even the bonus in the eastern countries of China, Japan and Russia supported the transition to convergence.

It was the arrival of international trade and growing multinational corporations that have drastically changed, as the principles of Western accounting accepts worldwide. While perhaps only a very large company would be in the 70 and 80 and 80.International negotiations were carried out for years, and the turn of the millennium was recorded by small businesses involved in international trading. More trading borders decrease every day and allow for easier means of global trading. Both large and small businesses have found that they can save money by using resources from the external boundaries of their countries. The worldwide collection of accounting rules can now be found within IFRS and this understanding opens even more participants to international trade.