International Accounting includes various measures that act as an integral part of organization functioning in order to channelize all the issues related to cost and accounting so as to expand its operations internationally. There are a particular set of rules associated with this particular feature that are governed by International Accounting Standards Board (IASB). This associated perform its operations over organizations operating at global level through proper and enhanced application of international accounting standards. There has been a considerable change in the way of operation of accounting standards along with the way of their application, due to high degree of change in environmental factors. These factors need to be scanned and included in accounting standards so as to increase their efficiency. Along with the increase in the concept of globalization, there has been a considerable increase in application of this concept along with the way of its application so as to regulate and mark flow of money. (Peter Walton, 2003)
International Accounting has become an inevitable factor for finance department of all the organization because of introduction of a large number of significant standards that could be included in its functioning.
Methods using which a firm can expand its operations
There are two important methods that should be taken into account for a firm to expand its functioning in international market significantly,
Monetary methods are those that are mainly concerned with money, like paying or receiving money for these items. These items are generally analyzed on their face value along which helps in their better assessment. This part of expansion is generally taken care by accounting section of the organization, which also need to expand its domain of working as organizational functioning expands.
Non-monetary methods are those that are concerned with features not involving money. These items are measured in terms of their real values, which makes them highly variable in nature. Another aspect related with these factors is that they are referred differently in different circumstances like market value, fair value, present value, historical cost, etc. Various factors like capital values and retained income balances are also an integral part of non-monetary items. There is a continuous change in the share capital based over the real value of various elements, which makes it highly essential to make an implementation of accounting standards over these variables that will help in their apposite assessment. It is one of the most important factors that define success of a venture at international level. There is a scenario in which serviceable currencyâ€™s internal value on real basis are getting highly affected by the obliteration of cash inflation especially in those countries with economies having low inflation. In above mentioned case also, there is a need for adjustment of real values of these items on a significant basis.
Factors affecting success or failure of a venture
Prime factors that categorize a venture as successful or unsuccessful are given below,
Accounting model possess high relevance because of its wide application along with level of exposure it has encountered. International Accounting is a well defined combination of various previously followed accounting models with low inflation. Inflation rate is calculated on an annual basis that is quite easy to be evaluated is retained income of company or a nation is available. For a venture to be succssful at international level, it should possess appropriate accounting standards in its structuring. (Sale, 2004)
Inflation is one of those entities that are considered as a clear representation of economic condition. This involves all economic and non-economic factors associated with the organization or nation for which inflation rate is to be calculated. Thus various factors that are related with this feature should be taken into account for its proper analysis that increases level of ambiguity. In order to explain this concept in an explicit manner, there is a need for certain standards that will help in measuring this parameter in proper format. Another factor that should be considered is that possible source of income for a venture. If income of a venture comes from diversified sources, it is more likely to become successful even if inflation rate becomes considerably high. All these features raise the need of adoption of suitable accounting measures that are guided by a particular set of standards and are capable to operate an organization successfully at international level.
Accounting also helps in taking care of shareholders that should be done in an appropriate manner, which will help in better assessment of companyâ€™s present market positioning, after it has followed expansion strategy. This is because of significant impact along with high level of influence of stakeholders over organizational performance especially in financial respect. International accounting helps organization to choose best possible strategies that will assist organization in increasing shareholderâ€™s interest in the company which ultimately helps organization in gaining an upper edge in competitive environment. Accounting is considered as best possible tool to perform this activity as financial examination of external entities is considered to be as best possible analysis that could be performed for current analysis of the company after various expansion tactics have been applied at international level. There is a critical need to make sure that these accounting standards are applied in appropriate format as improper application of those may result in financial disturbance which is considered as one of the most difficult problems an organization may incur, leading to its failure. One such situation could be hyperinflation which is a result of improper application of accounting standards along with unfavorable financial analysis, when an organization faces various international constraints. This might also result in unnecessary exaggeration of certain variables that will directly make an impact over real values, hence resulting in affecting the balance within organization.
International Accounting is considered as one of the most important parameter that has to be included in the functioning of the organization or nation as it takes care of economic resources with the help of counting. This procedure is guided with the help of certain standards decided by the authority taking care of all such factors to indicate final status of the organization, i.e. successful or failure. These standards are updated on a regular basis so as to make sure there is proper synchronization between companyâ€™s analysis and external factors, when an expansion effort is made in global market. As these standards are applicable at even national level, which makes it highly important for companies operating in more than one country to involve these factors in their functioning which will help these organizations in keeping an appropriate record of availability of resources. It also assists such organization to work in accordance to the local and global standards of functioning, which may vary from place to place hence affecting their productivity. There are a large number of factors like inflation, shareholder analysis, monetary and non-monetary issues that has to be taken into consideration because of their lofty significance in defining present condition of the organization along with its future aspects when it extend its working to global level.
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