Chap 1-3 International Accounting Course Notes Essay

1. Political: “issues affecting our international vendors could materially adversely affect our business and financial performance.”(Page 8.)

(a) Indicate which items on the list would generally be reported as intangible assets in the balance sheet.

Classify each of the items as an asset, liability; revenue; or expense from the company's viewpoint. Also indicate the normal account balance of each item.

3. Discuss how the fact that foreign companies are not subject to the same accounting, auditing, and financial reporting standards and practices as U.S. companies poses a risk not typically encountered when investigating in the stock of U.S. companies.

International projects present multinational corporations with many complexities in organizing a profitable transaction structure.Foreign exchange risk is an underlying problem. Credit risk presents another challenge. Payment terms and the certainty of realizing them can be difficult points. Negotiations with foreign corporations and governments, and with agents and intermediaries, present additional challenges. An example of the demanding environment for global financial activities is presented in the case of "Avicular Controls and Pakistan Airlines". It is found in Cases in International Finance on page 40.

c. Exchange rate risks: significant portion of revenue stream born currency exchange risk (peso vs. USD) regardless of geographical and product diversification. These risks were absolutely external and thus could have been hardly mitigated.

I. the ordering of assets: Club Med put fixed assets before current assets but U.S. companies would do it inversely. Also, the current assets, U.S. companies follow order of liquidity so they would put bank and cash in first place and then receivables.

Often these steps are followed by negatives. According to page 3, firms must face and understand the risks accompanied by foreign exchange, note the possible challenges of doing business with foreign markets, and identify marketing opportunities (Farooq). While these steps are carried out by all firms, they can be very daunting. This is why large firms, that are more experienced, proactively seek marketing opportunities. Due to their size, these small firms tend to be intimidated when it comes to seeking opportunities, therefore they seek them reactively. When these steps are not carried out carefully and as planned, the negatives of exportation come forth. Where most firms find themselves in trouble is when they have poorly analyzed the market in which they are trying to export, lacking expertise required to enter a foreign market, or poorly executed campaigns with their desired market. The reasons stated above are why the barter and trade system needs the two other key factors in order to successfully work.

The last one is the Balance Sheet which tells a person the lists of assets he has, the list of

This order is most appropriate because it simplifies the reader’s experience; a randomly ordered list of assets would be less intuitive. The two largest currents assets were cash and cash equivalents, and marketable securities.

Balance sheets and income statements are a snapshot of a company’s stability and financial situation. Combined the statements show the income, expenses, and stockholder’s equity in the company. These statements are often analyzed by financial institutions when a company comes to them needing a loan. Stockholders and other investors also look at these statements to make sure their investment will return a profit for them. This paper will look at four different companies and their balance sheets and income statements. The companies are Eastman Chemical Company, Covenant Transportation

This course work is to evaluate the different factors affecting the international business. Such as political, social, economical, and technological. You will see all these factors to be discussed in a chosen company and it also contains supply chain with logistic process of the chosen company.

The business environment appears to get smaller with each passing day. Therefore, accountants face troubles in remaining protected from the progressions that occur around the world (Diaconu and Coman 2006). Globalization hint at the regularly changing procedure of incorporation and connection among governments, individuals and organizations. The key three things that declare incorporate globalization venture, worldwide exchange and data innovation (Diaconu and Coman 2006). Globalization moves the world to another level and places it to more at the leading edge statures reliably. Outstandingly, globalization procedure have both negative and constructive effects on accounting (Godfrey and Chalmers 2007). This is unmistakable as in,

This mode of accessing the foreign market involves high costs in transporting and marketing. The firm here manufactures goods in one country and then incurs the cost of marketing them abroad. This may take place through sales by foreign distributors, sales agents, overseas sales subsidiaries (Chee and Harris 1998:294).

In order for organizations to infiltrate the global market, leaders must create and implement a sound business model and develop global strategies that will allow the organization to compete across national boundaries. The creation of a sound business model provides the value required for organizations to flourish in domestic and global markets. So, before tapping into the global market, organizational leaders should perform an external audit to forecast future trends and market opportunities to help them navigate the global landscape. However, it’s important that organizational leaders understand the principles of trade agreements and the determination of currency exchanges.