Currently, it becomes more significant to understand the role of accounting played in the financial market in order to explore the deep knowledge of the relationship between the accounting and real practice financial world, especially in the capitalism state. Catchpowle, Cooper and Wright insisted (2002) that the accounting and capital are not distinct forms, and the social relation between them need to be focused. The current financial market and economic situation has a crucial implication for accounting. According to the suggestion mentioned by Hopwood(2009), the implication of accounting can be applied to the financial economic crisis, both for practise and the research community. Therefore, in a specific situation of European sovereign debt crisis, the accounting also played a special role that may influence the process of the debt crisis happen. Since later 2009, some European countries are impossible for them to repay and refinance their government debt without the assistance of third parties. According to the Nelson’s introduction (2012), on 20th October 2009, the Greek government announced that the deficit will exceed 12% of gross domestic product, far above the European Union’s 3% ceiling. Then, the three major rating companies have cut Greece’s sovereign credit rating successively, and the European sovereign debt crisis first broke out in Greece. Later, Portugal, Spain, Ireland, Italy and other countries continuously reported fiscal problems; major Eurozone countries such as Germany and France also suffered it. A lot of economic professors investigate into the causes of this crisis and give their own opinions; most of them can be related to the accounting activities. The detailed explanation will be illustrated in the following paragraphs. The mainly purpose of this essay is to develop the deep understanding of accounting in the real financial market and apply the knowledge of ARC (accountability, representation, and control ) into the...
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