ABSTRACT
Although Chinese accounting has a longer history than most other civilisations, the most significant improvements occurred during the post-revolutionary period. Before the promulgation of the first accounting standard, the financial accounting system was fund management oriented and was very hard to comprehend. The issue of the new accounting standard paved the way to link Chinese financial accounting and reporting to the outside world. The Chinese cost accounting system originated in the Soviet Union and since then few changes have been made. The only change made in recent years is to treat financial and administrative expenses as period expenses rather than previous inventoriable expenses. The most successfully developed area in management accounting in China is responsibility accounting. The Chinese taxation system was restructured in 1994. Unlike western countries in which income tax is the main financial source of government revenue, in China turnover taxes are the main sources.
