A Comparative Study Of Chinese And Korean Accounting Standards

Following the rapid development of world economy and trade, accounting hasnow become a common corporate language of the world. As far as world economiesand the development of trade are concerned, no country can avoid the worldeconomic system or the development of capital markets independent of the worldeconomy. Accounting has become the common commercial language of the worldeconomy and trade, including that of world capital flow and therefore plays a crucialrole in the process of economic globalization. In order to conduct trade with othercountries, we need to evaluate the other party’s financial statements, analyze theirproductivity, their financial risk and their current credit. Accounting information is acrucial element as far as transactions within the economic world are concerned andtherefore there is an urgent need to develop a uniform accounting standard in theworld.The growth of multinational enterprises has led to and contributed to thedevelopment of the internationalization of accounting standards. The1960s usheredin the birth and rapid growth of this new form of enterprise system on a multinationallevel and, as a result, Multinational banks, multinational security companies andinternational investment funds also experienced rapid growth and expansion. Whenthese multinational organizations do business on an international, they must be awareof and understand the relevant policies of other countries, particularly accountingpolicies. Therefore in order to strengthen cooperation its subsidiary and conductbusiness on an international level, multinational corporations must understand thefinancial position of the enterprise as a whole, as well as the subsidiary’s financialcondition as a result of the proposed business transaction. Therefore there is a need for standard and widely shared accounting principles that are generally acceptedwithin the international economic system. These accounting principles would serve toprotect multinational corporations and their subsidiary’s financial statements andother information that’s provided for comparison.At the same time, the internationalization of capital markets calls for thedevelopment of international, uniform accounting standards which can thereforeguarantee the safe and secure comparison of financial information.Following the recent listings of multinational corporations and security report, thereis an increase in terms of the international allocation of capital. This demonstrates thatthe internationalization of capital markets is on the rise. In such situations, investorswill therefore be asked to provide detailed, reliable financial statements. Henceaccounting information plays a crucial role within the various markets. Not only doesthe quality of this information affect the value of the financial transactions but it alsoaffects the capital provision and the amount stipulated within the transaction.Therefore there is need to develop a national accounting secure, regulatory bodythat can make accounting information available to international investors, which canalso provide opportunity to make a comparison of the various accounting standards.The purpose of this paper is to provide a comprehensive comparison ofinternational accounting standards used in Korea to those that are used in China, withthe hope that in the future when China adopts these international accounting standards,this study will be a means of providing reference for their application.