Department of Accounting and Finance, University of Vaasa,
Finland

4. Recapitulation

The differences between financial accounting based on the Finnish expenditure-revenue accounting and the American GAAP are the difference in the going-concern convention, and using the cash account as the central reference account instead of owners' equity. Consequently, the monetary measurement convention is even more pronounced in expenditure-revenue accounting than in a financial accounting based on GAAP. The balance sheet considered a secondary, auxiliary account connecting the successive accounting periods. A circular reasoning is used in expenditure-revenue accounting with regard to relationship between annual profits and the total profit. The time value of money is ignored.

The difference of the Finnish and GAAP thinking is most pronounced in teaching introductory accounting, because the former is focused on income determination and is geared around the income statement. On the other hand, the financial accounting practices are not significantly different between the Finnish and the GAAP view.

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