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Cost Accounting in Germany and Japan

A Comparative Analysis


Matthias Moeschler

Cost accounting has developed differently across countries due to cross-national variance in national financial reporting systems, education and culture. Differences in cost accounting impede a uniform and coherent business management in multinational companies. For this reason it is necessary to sensitize practitioners for national specifics in cost accounting. This study empirically shows that significant differences prevail between German and Japanese cost accounting systems due to variances in national culture and the education of cost accountants. It further provides recommendations for practitioners how to install successful cost accounting systems.


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1 Groundwork


1.1 Introduction Motivation 1.1.1 Cost accounting has a long tradition. It is one of the management accounting instruments that has contributed to the emergence of accounting as a discipline. The origins of cost accounting can be traced back to the 14th century. Cost accounting as we know it today, however, has emerged since the beginning of the 19th century. It has developed differently across countries. In particular in the UK, USA, and Germany cost accounting ideas and concepts have developed early. As a consequence, these countries have been most influen- tial in spreading cost accounting ideas and concepts around the world1 and have thereby contributed to the development of cost accounting in other countries. Japan, for exam- ple, has absorbed many German and US cost accounting ideas and concepts.2 In spite of these strong influences, Japan has developed a distinct approach to cost accounting.3 Ja- pan has adapted the Western ideas and concepts to its specific environment and thus cost accounting systems and practices different from those found in the West have emerged as a result of particularities in culture, education, and financial accounting systems.4 As these determinants vary also between Western countries, strong differences prevail as well, e.g., between the USA and Germany. These cross-national differences impede a uniform and coherent business management in MNC. Standardizing cost accounting systems within MNC can in fact facilitate a uniform and coherent business management, but foreign sys- tems might not be accepted by local employees that have different views, habits, and pref-...

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