Research Paper About Explaining The Accounting Concepts (Essay Sample)

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Explain Accounting Concepts
Introduction
Management styles and accounting practices in Germany are significantly different from the way in which they are performed in Canada. This is largely because of the way cultures rate on the dimensions as well as the values established by the theories of Hofstede and Gray. Hofstede’s cultural dimensions as applied in accounting by Gray (1988) are used to classify Canada and Germany. Both countries use different accounting systems and operate within soci0-economic environments which have some distinctions in terms of features that influence accounting practices.
First, the Canada has Anglo-American accounting as well as the auditing tradition hence flexibility and professionalism often prevails. In other words, her accounting system safeguards shareholders’ interests. In contrast, Germans are not typically flexible as compared to Canada. They have a rigid and a standardized management accounting system because their low tolerance on flexibility.
Secondly, Canada has a common-law accounting system which it includes the accounting standards used to prepare financial information. The provincial and the federal law left the regulation of accounting standards to the Canadian Institute of Chartered Accountants (CICA). There is uniform plan of accounts and instead standards evolve by becoming commonly accepted in practice.
On the other hand, Germany instills specific and formal rules to ensure accounting and business functions are handled consistently, as demonstrated in its rigid and standardized management system. Here, the employees are bound by strict guidelines on matters relating to how to behave, what to execute and their performances at the end of the day.
However, on matters to do with political environment and differences that affecting accounting in both Canada and Germany, there are different models that includes the variations of tax law which indicates whether the country focus on socialism or capitalism. For this case, Canada falls under what is called common law, in simple terms, in Canada accounting rules are not laws but rather standards or recommendations whereas Germany falls under code law countries that forms loose groups and here the accounting is part of the legal system.
In addition to the political environment and difference, Canada allows the capitalization on research and development in its system of accounting. This is not allowed in Germany economy. Similarly the book and tax timing difference being recorded on the accounting systems as deferred taxes is needed in Canada but merely allowed or perhaps not allowed in countries like Germany.
Many people anticipate that accounting standard setting process should and must be protected from politics, ironically, there are many proves indicating that all this process incorporates political process. However, the process of accounting standard-setting, the political behaviors are the various actions that government of a country, based on their own interests, impact the accounting standard-setting institutions to develop guidelines (Brown, 2005). For in...