The International Accounting Standards Board Essay

1506 WordsOct 1, 20167 Pages
The standards by which financial statements are reported are known as Generally Accepted Accounting Principles (GAAP) (Finkler, Jones, & Kovner, 2013). The United States (US) recognizes GAAP to be a set of rules used by accountants in financial reporting (Finkler et al., 2013). The United States-GAAP (US-GAAP) were established by the Financial Accounting Standards Board (FASB) (Finkler et al., 2013). The US-GAAP are primarily used in the US whereas many other countries have adopted their own general accounting standards known as the International Financial Reporting Standards (IFRS) (Finkler, Ward, & Calabrese, 2013). The IFRS were established by the International Accounting Standards Board (IASB) and have both similarities and differences to the US-GAAP (Finkler et al., 2013). The purpose of GAAP are to standardize the manner in which the financial status of an organization is interpreted so financial information is useful for investors, lenders and those that an organization is accountable to or compared to (Finkler et al., 2013). US-GAAP is a standard used to assess company performance (O 'Farrell & Chunhui, 2015). When a company desires to raise funds they must get investors to invest. The US-GAAP is a standardized way companies prepare financial statements that allows investors to evaluate company performance against other companies in order to make an informed decision (O 'Farrell & Chunhui, 2015). Foreign companies may use the International Financial
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