Due to the world turning into a global village you cannot evade globalization. This makes the states economies all conjoined in a way no one can separate. However, regardless of this every state and nation has its own way of handling finances. Currently, it is difficult to compare the financial statements of a company from one country to those of another. As globalization accelerates, the idea of harmonization between different countries' accounting systems becomes more necessary. Though it is a complex challenge to construct and enforce a worldwide set of accounting standards, there would be many advantages. A uniform accounting system would lead to more comparable financial information, encourage international investment and trade, and minimize future economic crises. In this article, we are goner discuss some of these advantages for universal accounting at The Amazon Accountants.
The harmonization of accounting standards would allow for the financial statements of all companies to be comparable. If every financial statement was calculated following the same standards, it would be easier to compare one corporation's performance to any others. It would even be possible to compare the financial statements of a firm in one country to those of a firm across the globe. There would be no confusion for any of the various financial statements users because they would all be prepared using the same standards. The enactment of a harmonized set of accounting standards would make the financial statements of different countries around the globe more comparable, click here!
Easily comparable financial statements would help to facilitate international investment. Most individuals are only familiar with the financial statements of their country of residence. Foreign financial statements most often are not created following the same accounting policies. Though the information they convey may appear similar, one cannot make a proper comparison because the numbers were not calculated the same way. This can make international investment a bit more risky, and therefore less likely that the average individual will participate. If a universal set of accounting standards is into place, the flow of capital across international borders would increase. Everyone, from multinational firms to individuals, would easily be able to compare the financial statements of any firms in any country. Investors could be more certain about the financial health of a foreign company and would then be more likely to invest.
In addition to increasing international investment, harmonization would also have an effect on international trade. Today, firms often choose to buy products and natural resources from other countries because of greater abundance or better prices. Get more facts about accounting at http://psychology.wikia.com/wiki/Accountants.