Register now or log in to join your professional community.
Thank u for invitation
Generally Accepted Accounting Principles (GAAP) is a term which has sprung up in recent years and it signifies all the rules, from whatever source,which govern accounting. In individual countries this is seen normally as a combination of.
1. National corporate law
2.National accounting standards
3.Local stock exchange requirements
In many countries, like the UK,GAAP does not have any statutory or regulatory authority or definition, unlike other countries, such as the USA.
A Conceptual framework in accounting is a statement of generally accepted theoretical principles and not rules which form the frame of reference for financial reporting. The financial reporting process is concerned with providing information that is useful in the business and economic decision making process. As such a conceptual framework will form the basis for determining which events should be accounted for, how they should be measured and how they should be communicated to the user. In short a conceptual framework for financial reporting can be defined as an attempt to codify existing GAAP in order to reappraise current accounting standards and to produce new standards
IFRSs set out recognition, measurement, presentation and disclosure requirements dealing with transactions and events that are important in general purpose financial statements. IFRSs are based on the IASB framework, which addresses concepts underlying the information presented in general purpose financial statement,facilities the consistent and logical formulation of IFRSs.
IFRSs are designed to apply to the general purpose financial statements and other financial reporting of all profit oriented entities.
Thank for invitation .................. I agree with theShameer Nazir Madari answers
GAAP
Generally Accepted Accounting Principles (GAAP) are a common set of accounting principles, standards and procedures that companies use to compile their financial statements. GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information.
GAAP are imposed on companies so that investors have a minimum level of consistency in the financial statements they use when analyzing companies for investment purposes. GAAP cover such things as revenue recognition, balance sheet item classification and outstanding share measurements. Companies are expected to follow GAAP rules when reporting their financial data via financial statements. If a financial statement is not prepared using GAAP principles, be very wary!
That said, keep in mind that GAAP is only a set of standards. There is plenty of room within GAAP for unscrupulous accountants to distort figures. So, even when a company uses GAAP, you still need to scrutinize its financial statements.
IFRS
International Financial Reporting Standards (IFRS) are a set of international accounting standards stating how particular types of transactions and other events should be reported in financial statements. IFRS are issued by the International Accounting Standards Board, and they specify exactly how accountants must maintain and report their accounts. IFRS were established in order to have a common accounting language, so business and accounts can be understood from company to company and country to country.
The point of IFRS is to maintain stability and transparency throughout the financial world. This allows businesses and individual investors to make educated financial decisions, as they are able to see exactly what has been happening with a company in which they wish to invest.
IFRS vs. GAAP
Differences exist between IFRS and other countries' generally accepted accounting standards (GAAP) that affect the way a financial ratio is calculated. For example, IFRS are not as strict on defining revenue and allow companies to report revenue sooner, so consequently, a balance sheet under this system might show a higher stream of revenue. IFRS also have different requirements for expenses; for example, if a company is spending money on development or an investment for the future, it doesn't necessarily have to be reported as an expense (it can be capitalized).
Another difference between IFRS and GAAP is the specification of the way inventory is accounted for. There are two ways to keep track of this, first in first out (FIFO) and last in first out (LIFO). FIFO means that the most recent inventory is left unsold until older inventory is sold; LIFO means that the most recent inventory is the first to be sold. IFRS prohibit LIFO, while American standards and others allow participants to freely use either.
Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.
