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he two common methods used internationally for the order of which assets are listed on the balance sheet is presenting assets in order of liquidity or presenting assets in reverse order of Liquidity. In America, assets are listed in order of liquidity starting with cash and cash equivalents. In Europe, assets on the balance sheet are listed in reverse order of liquidity starting with non-current assets (Doupnik, 24)The two major types of legal systems used in the world are common law and codified Roman law. For code law, countries that use this generally have corporation law that designates the legality for business parameters. Also, code law tends to be general with not much detail for specific accounting practices and little to no guidance in certain areas in the field. Unlike code law, common law tends to be more developed and detailed in their rules and are developed by non legislative organizations (Doupnik, 28-29)For some countries, their basis of taxes is formed through their financial statements. In other countries, financial statements are adjusted for tax purposes and submitted to the government separately from the reports sent to the shareholders. What generally happens when a country bases their taxes through financial statements is that if you record a low income on your statements, your tax liability is decreased. For countries that adjust their financial statements for tax purposes, the only conformity between tax and financial statements that’s needed is if a company decides to LIFO. Recording of depreciation can differ between taxes and financial statements (Doupnik, 29). The major providers of financing for businesses are family members, banks, government, and shareholders. For countries with financing is dominated by banks or the state, there is less pressure for public accountability due to a board of directors of the bank or state obtaining information necessary to make decisions for that company. For companies financed by shareholders, more information is demanded but a company cannot give every single investor every piece of the company’s financial information. Instead, this is presented through their financial statements (Doupnik, 29-307. The hypothesized relationship between culture value of uncertainty and and accounting values of conservatism and secrecy. For values of conservatism, the relationship stems from a concern for security and the need to develop a cautious approach to cope with uncertain future events. For secrecy, a strong uncertainty avoidance stems from a need to restrict information to preserve security through the entity and to avoid conflict and competition. Also, secrecy aims more towards collectivism instead of individualism so that workers are more concerned with the success of their company and not external parties (Doupnik, 38).8. Anglo countries would be more likely to exhibit high individualism, low uncertainty and avoidance, low power distance, and moderate masculinity. Given these characteristics, they would rank low on accounting values of conservatism and secrecy. For Latin culture, they are expected to rank higher on the conservative and secrecy rankings, putting the two cultural areas on exact opposite sides of the spectrum (Doupnik, 39).9. According to Nobes, the two most important factors influencing ¬†differences in accounting systems across countries is culture and the nature of the financing systems. For culture, he describes that some cultures lead to strong equity-outsider financing systems and some lead to weak equity-outsider financing systems. For example, Malawi has a weak equity-outside financing system which would usually put it into class B, but given that Malawi is British colony, they became a Class A accounting system due to their culture and Britain being Class A. Class A accounting systems tend to be less conservative, disclosure is extensive, and accounting practices differ from tax rules. Class B tends to be on the opposite side of the spectrum from each of the characteristics for Class A countries. Ex. 1A.Gross Profit MarginCallaway Golf Company = (343,763/950,799) = .3616Sudzucker AG = (N/A/5,718.20) = N/A, Company does not differentiate COGS vs. Operating expensesCEMEX = (58,129/197,801) = .2939Sol Melia Sa = (N/A/1,148.7) = N/A company does not differentiate COGS vs. operating expensesThai Airways = (N/A/161,602,742,485) = N/A company does not differentiate COGS vs. operating expenses Operating Profit MarginCallaway Golf Company = (-30,534/950,799) = -.0321Sudzucker AG = (392.4 / 5,718.2) = .0686CEMEX = (15,840/197,801) = .0801Sol Melia Sa = (105.2/1,148.7) = .0916Thai Airways = (13,844,815,818/161,602,742,485) = .0857Net Profit MarginCallaway Golf Company = (-15,260/950,799) = -.0160Sudzucker AG = (276.4 / 5,718.20) = .0483CEMEX = (1,649/197,801) = .0083Sol Melia Sa = (43.5/1,148.7) = .0379Thai Airways = (7,415,827,014/161,602,742,485) = .0459B. No because each of the companies differentiates how they record they’re cost of goods sold and operating expenses, making it unreliable to rely on gross profit as a measurable finance ratio. Ex. 8Of the factors listed, I believe that taxation would cause the largest impediment due to the vast differences in taxes throughout the world, even in the U.S. Taxes in Europe are greatly different than the new tax law that was just put into place, and with the U.S. be a major power in the world, they’re complex and changing tax system would just be one problem. Deciding on the relationship of taxes and the financial statements could be a large discussing point and cause a large debate due to difference in beliefs on the topic. Although each factor would bring an impediment, the one I feel would bring the smallest impediment would be providers of financing. Providers of financing mainly comes from banks and stockholders. Although there are many banks that have differences in beliefs on financing, given they’re only category, I feel compromise would be easier. Also, there are shareholders in each company for companies and after IFRS and GAAP converge, although expensive and timely, shareholders will have an easier time in viewing financial statements under one standard instead of two.

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