How Accounting Rules in Different Countries Impact Firms Ability to Compete Globally - Research Paper Example

The following are some of the accounting laws;
(i) Expenditure rule
The term expenditure means the total cost when something was initially procured, whether that procurement took place today or some years before.

(ii) Materiality
Due to this accounting guideline, an accountant can breach some accounting rules if the quantity is irrelevant.

(iii) Harmonizing law
It entails firms to employ the accretion basis of accounting.

(iv) Departing concern rule
Believes that a firm will keep on to living long enough to hold out its goals and will not liquidate in the coming years.

(v) Financial unit hypothesis
Financial practices are assessed in U.S. dollars, and only dealings done in dollars are documented.

How Financial Unit Hypothesis may affect Coca Cola Company
Coca-Cola Company can be exposed to exchange danger. It takes place when the flows of the financial elements in the overseas bazaar diverge from the worth originally predicted for that money. (Bravo, 159).

The dangers will affect the financial routine of this Company in the forms such as conversion, operation, and working dangers. This will make the company not fully compete with other multi-national companies effectively. The conversion experience refers to adjustments in the value of revenue report and equilibrium sheet of a supplementary when they are re-examined at consolidation, from home currency to parent’s money stipulations (Bravo, 160). These will lead to the Coca-Cola Company having economic dangers. These risks will weaken the company’s purchasing power globally whereby, for example, a dollar from a 1960 transaction is combined with dollars from a 2014 transaction thus the purchasing influence will be brought down by the effect of these. Read More