Financial Performance and Position on an International Scale
Financial Performance and Position on an International Scale
Introduction
Accounting defined by American Institute of Certified Public Accountants (AICPA) as “ the art of recording , classifying and summarizing in a significant manner and in terms of money, Transactions and events which are, in part at least, of financial character, and interpreting the result therefore.”Accounting was always being basis for future strategy plan lay out. Nowadays a path of accounting related to financial has found charisma among high profit making companies and Vigilant Investors. If somebody or a company has to do some research on company's background, they only needed annual report of the company. This report has all the vital information of the particular company and their further prospects as well. Mainly all the information conveyed to the public is aimed to attract investors. However every country has its own set of rules regarding company reporting to general public, which will be discuss in later paragraphs. If any of the constituents of accounting system of a particular country alters, it has a propellant impact on country's way of conducting businesses and may create disorder or confusion within the system of the country. In order to deeply understand the problems may a company face in order to compare their financial stance; we will discuss the major accounting and their distinctive style of reporting.
Language
It is a small world and we already have been entered into global market place and now we need someone who can speak in the required language. Going global means having more subsidiaries in foreign countries. It also means the daunting task of serving customers in different zone, time, environment and different native languages. Prepared to take on the world and meet customers wherever they are. We know that every country has it is own language and the accounting transactions are give in the national language of the country. Many times it is big difficulty in translating or understanding the accounting information of other language it consumes lot's of time and efforts and then also there are chances of errors in getting or translating accurate data.
Accounting Terminologies
The following example is a demonstration that there is a major difference in issuance and analyzing the data. It is also known that there are different accounting terminologies but meaning is same. However there are listed companies who follow the standard format, in American companies there are two ways of presenting income and expenditure statements.
1) The similar format of deducting cost of goods sold from sales to show gross profit, then other income and to show operating income and income before and after tax in UK and US.
2) The other format is 'single step format where all the costs and expenses are subdivided either by function or business segment, which than subtracted from total income. Taxes may be shown the last expenditure or a separate item after 'income before income tax'.