Countries with large equity markets need financial reporting suited to disclosing useful information to investors. Other countries are likely to have an accounting system linked to the calculation of taxable income and distributable income. (Nobes and Parker, 2006, page 46).

1. Explain how differences in the legal systems can cause international differences in financial reporting.

(10 marks)

b) Explain how other external influences had strongly influenced accounting practices in the United States and in European countries.

(10 marks)

(Total: 20 marks)

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