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The differences between the General Accepted Accounting Principles and the International Financial Reporting System affect many aspects of business The changes of these accounting rules show future losses due to the fact that businesses have to pay for training employees and converting accounting software but the United States is still going through with the conversion The United States looks to make these rule changes in order to have comparable financial statements with business greater market liquidity and lower cost of capital The rule change benefits multinational companies as well The multinational companies will eliminate business expenses that multinational companies pay to report their financial statements in several different accounting standards Though there are advantages they may not be as important as some may proposeThe willingness to have comparable financial statements has become more of a need because the economy has gone more global and companies have become more multinational With comparable financial statements investors can see business from all over the world on the same plane Over the years trade has increased cross-border investments and integration of markets are easier with lower cost of capital and greater market liquidity Having the comparable information would allow for companies to allocate their capital more effectivelyHowever some suggest that having one standard does not mean that there is going to be comparability Though countries may have the same standards the standards may be enforced differently across the world There are about 113 countries that are currently using the International Financial Reporting System but 29 of those countries have added some of their own standards defeating the purpose of having one worldwide accounting standard The International Financial Reporting System has been said to have less specific rules that are made for guidance purposes The General Accepted Accounting Principles have strict guidelines to follow that do not need interpretation The International Financial Reporting System standards that are left for interpretation cause some concern There are concerns that the new
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