Gaap Vs Gaap And Ifrs

1135 Words Jun 10th, 2016 5 Pages
Current GAAP
GAAP is an acronym for Generally accepted Accounting Practices. These a common set of accounting standards, principles and procedures that are used by companies while compiling their financial statements. A combination of standards set forth by policy boards and the commonly accepted ways of recording financial information, GAAP is deemed necassary or companies to generate investor confidence. Any fundamental investor looking at a company for long term prospects looks for consistency in the financial health. By insisting that companies adopt GAAP, the government is able to provide Financial statements with a minimal level of consistency to potential investors. This ensures that important factors like balance sheets and shares outstanding are measured and classified in a standardized manner in order to enable a proper comparison with other firms .
Comparison between U.S. GAAP and IFRS
GAAP is tailored to meet the specific economic conditions of the United States, while IFRS is designed to meet the financial reporting requirements at an international level (Smith, 2004). Thus, while the two shares several similarities, these two accounting practices serve different purposes. When considering foreign investors, the IFRS is if greater importance than GAAP. While both accounting practices have similarities on the accounting model that they follow, the differences are seen in the guidances they offer (Ernst and Young, 2012). For instance, while both accounting…

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