Theoretical Aspects of Equity Accounting: Comparison of National and International Accounting Standards

Authors

DOI:

https://doi.org/10.58423/2786-6742/2025-9-140-158

Keywords:

own equity, accounting, regulatory framework, national standards, IFRS, comparative analysis

Abstract

Equity is one of the fundamental categories of accounting that reflects the value of an enterprise's assets after deducting its liabilities. Effective management of equity is a key element in ensuring the financial stability and competitiveness of economic entities. However, in practice, there are significant differences in approaches to equity accounting across various countries, influenced by national accounting standards and the application of International Financial Reporting Standards (IFRS). The purpose of the study is to summarise theoretical approaches to understanding the essence of equity capital, identify conceptual differences between national and international approaches to its accounting, and formulate proposals for their harmonisation. The article analyses the meaning of the term ‘equity capital’ in domestic and international regulatory documents, describes the classification of equity capital components, and outlines methodological differences in the recognition, measurement and presentation of capital in accounting. It looks at elements of equity, like authorised capital, additional capital, retained earnings and reserves, as well as the role of capital in reporting on the financial position of a business. The focus is on a comparative analysis of national accounting standards and IFRS to identify differences in approaches to equity accounting. The study examines the definition and classification of equity, principles of its valuation, and its presentation in financial statements according to national and international standards. The advantages and disadvantages of using international standards compared to domestic practices are identified. Harmonisation of approaches to equity accounting between NAS and IFRS is a prerequisite for improving the reliability and comparability of financial statements, which in turn will promote business transparency, improve the investment climate and facilitate the effective integration of Ukrainian enterprises into the international economic environment. Recommendations are proposed to improve equity accounting methodology to enhance the quality of financial reporting and align it with international requirements.

Author Biographies

Veronika Hanusych, Ferenc Rakoczi II Transcarpathian Hungarian College of Higher Education (FR II THCHE)

Candidate of Economic Sciences, Associate Professor

Vivien Shimon, Ferenc Rakoczi II Transcarpathian Hungarian College of Higher Education (FR II THCHE)

Master’s student

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Published

2025-06-25