Difference Between Gaap And Ifrs
GAAP is brief of generally accepted accounting principles. GAAP is the set of concepts, guidelines, and rules that are produced for reporting balance sheet entries and recording business transactions. The features of GAAP comprise standards for how to classify items on a balance sheet, how to calculate outstanding share measurements, and how to calculate revenue. GAAP is created by an independent, private seven-member board called the Financial Accounting Standards Board.
GAAP`s standards provide general uniformity in figures that are used to calculate important financial ratios that analysts and investors use to evaluate the company. Even compliant balance sheets can be challenging to be decoded, but without a system that defines each category
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To facilitate and promote adoption of IFRS, being the interpretations and standards issued by the IASB, through the concourse of national accounting standards and IFRSs. (IFRS Foundation)
• GAAP vs. IFRS
The below table show some of the differences between GAAP and IFRS. GAAP IFRS
• United state companies prepare their financial statements according to "generally accepted accounting principles,"
• GAAP rests with the FASB (Financial Accounting Standards Board), an accounting-industry group that has been given an authority by the federal government to set accounting rules.
• GAAP is a rules-based. The rules-based system is the letter of the law", leaving little wiggle room and laying out specific benchmarks. They said: Wash the van whenever you drive on a dirt road three times in a two-day span (rules-based). • not just the United States, They’re drawn from around the world,
• IFRS comes from the International Accounting Standards Board, which is also be made up of representatives of accounting industry.
• IFRS is a principles-based system. The principles-based system are standards written with a tension on the "spirit of the law", getting companies to abide to fundamental principles, while allowing for differing interpretations. They said : "wash the delivery van when it gets dirty"
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