Chapter 2
How are the Anglo and less developed Latin cultural areas expected to differ with respect to the accounting values of conservatism and secrecy?
ANSWER: Anglo cultural area: less conservatism & more disclosure; Latin cultural area: more conservatism & less disclosure
What are the two common methods used internationally for the order in which assets are listed on the balance sheet?
ANSWER: Assets in order of liquidity, beginning with cash, and assets in reverse order of liquidity, beginning with intangible assets.
Which of the two methods is most common in Europe?
ANSWER: Assets in reverse order of liquidity, beginning with intangible assets.
Who are the major providers of capital (financing) for business enterprises?
ANSWER: Equity investors (shareholders), banks, family members, and government.
What are the hypothesized relationships between the cultural value of uncertainty avoidance and the accounting values of conservatism and secrecy?
ANSWER: Strong uncertainty avoidance is associated with both conservative measure of profit and assets and secrecy (less disclosure) to restrict information and avoid conflict and competition.