ACC 290 IFRS v. GAAP

1149 Words5 Pages
Comparing IFRS to GAAP Essay
ACC/290
November 24, 2014

Comparing IFRS to GAAP Paper
Although the International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) have a lot of similar guidelines and expectations, they also differ in many ways. The IFRS employs more of a “principles based” accounting standards whereas GAAP utilizes more of a “rules based” approach. Even though there are differences between terminology, revenue recognition, gains and/or losses, and statement presentation, both standards do follow the same conceptual guidelines. With the Sarbanes-Oxley Act (SOX) of 2002, the standards expected of foreign countries are significantly less than those that reside as publically
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A congruent between International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) is that both specification tend to use a statement of cash flows, income statement and a balance sheet (Nadel, 2010). When confronting cash equivalents and cash, both approaches are essentially similar in characteristic. Furthermore, the leading reciprocal is that both IFRS and GAAP assist in producing financial statements on an accrued basis; generally meaning that revenue is often recognized once it is realized (Nadel, 2010). In the course of time this will assist in a complete merger of both accounting principles in the near future; eventually a merger will assist with the differences associated with both IFRS and GAAP allowing for certain principles to be removed or restructured. Definitions of Revenues and Expenses
Gains and losses are not included in the definition of revenues and expenses under the IFRS. According to the IFRS, gains and losses would not be included in revenue or expenses because they do constitute operating activities. The IFRS describes revenue as the “gross inflow of economic benefits arising from the ordinary operating activities”. For example, if a cleaning service experiences a gain as a result of a stock investment in the books, this should not be included as a core operating activity, rather, on the financial statements, these items would be classified

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