Chap 1-3 International Accounting Course Notes Essay

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Chapter 1 Questions 1. How important is international trade to the world economy? a. International sales and trade can be a source of higher profit margins through additional sales. Unique products or technological advantages can provide competitive advantage that a company wishes to exploit by expanding sales in a foreign market 2. What accounting issues arise for a company as a result of engaging in international trade? b. New accounts added to the chart of accounts, foreign currency and exchange rates and the risk of falling rates, hedging, whether or not it is profitable for a company to invest overseas, financial reporting for overseas operations, international taxes, tariffs, fees associated with intercompany…show more content…
Chapter 2 1. What are the two most common methods used internationally for the order in which assets are listed on the balance sheet? Which of these two methods are the most common in North America, in Europe? a. The two common methods for assets to be listed is to go from noncurrent to current assets which is the least liquid to the most liquid and the other way is to reverse it and go from current to noncurrent which is liquid to nonliquid. The US goes from current to noncurrent and Europe does it the other way around. 2. What are the two major legal systems used in the world? How does each type affect accounting? b. There is the common law which is found in most English speaking countries and relies on a limited amount of statute law and has decisions establish precedents that develop case law that supplement the statutes. There is also codified Roman law which is followed in most non-English speaking countries that has relatively more statute law and covers a wide range of human activity. Code law generally has a commercial code which has basic parameters in which a business should act and often stipulates which financial statements should be published in accordance with a prescribed format. In countries with common law although there might be corporation laws laying down the basic framework, specific accounting rules are set up by the profession or an independent nongovernmental agency. In code law countries the accounting law

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