Gaap (Generally Accepted Accounting Principles) : Standards)

GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)
GAAP is a term which comprises of the definition of concept and values and also takes into
consideration the industrial rules. GAAP generally functions in order to ensure that the financial
report of an organization is transparent and reliable. The GAAP standards are not universal and
generally vary from one country to another country. In United States it is mandatory for the
organization to prepare their financial statements according to GAAP standards. GAAP is overall
stipulated by The Financial Accounting Standards Board (FASB) along with the Governmental
Accounting Standard Board which overall stipulates the GAAP in favor of both states along with
local government. SEC and GAAP are required and must be complied by the companies which
are publicly traded.
IFRS (INTERNATIONAL FINANCIAL REPORTING

STANDARDS)
IFRS is a set of account related standards developed by the International Accounting Standards
Board (IASB) which is a sovereign, non profitable organization.
The statement of financial issues are prepared and disclosed by multifarious companies for
which the goal of IFRS is to provide a overall frame work for these preparations. In general IFRS
provide leadership in favor of preparing the financial statements relatively not setting specified
industrial reporting rules. The companies which are large in nature have their subsidiary
companies in various countries and thus it is especially important for them to have an
international standard. A single global set of principles are adopted in order to carry out various
simplifying the accounting dealings which are allowed by a company by making use of a single
language of reporting.
The difference between the GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)
and IFRS (INTERNATIONAL FINANCIAL REPORTING STANDARDS) are as follows:
POINT OF
DIFFERENCE
GAAP
IFRS
A)STANDS FOR
Generally Accepted Accounting
International Financial Reporting
Principles.
Standards.
B)INTRODUCTIO
N
International Financial Reporting

Generally Accepted Accounting
Standards is a common globalised
Principles is a customary structure of
language in support of interactions
financial accounting guideline used in
performed in a business so that the
every jurisdiction; which is also called
accounts of the company are easily
accounting standards or standard
understood.
accounting practice.
Over 110 countries, including
United States
European Union.
C)USED IN
Either revenue or loss, either
Income or expenses, assets otherwise
D)ELEMENTS OF
liabilities, profits, losses along with
PERFORMANCE
comprehensive income.
assets or liability.
Balance sheet, statement of

Financial statement, statement of
income, equity variations,
E)DOCUMENT
income, comprehensive income
statement of cash flow along with
NEEDED IN
statement, equity variation, statement of footnotes.
FINANCIAL
cash flow along with footnotes.
STATEMENT
F) ESTIMATED
Last in, first out, first in, first out, cost
First in, first out, cost according to
according method of weighted average.
method of weighted average.
It is prohibited.
Certain criteria are there under
INVENTORY
G) REVERSAL
INVENTORY
which it is permitted.
Non attendance of a standard or
On the other hand Under IFRS, the
H)FRAMEWORKS
analysis applied for an issue has no
management of the company
INTENTION
stipulation which clearly requires
clearly requires the framework to
management under US GAAP or
mull over.
(FASB) framework.
I) FINANCIAL
Wide ranges of specifically focused
It also provides relevant
STATEMENTS
information are provided to the
information which is broadly
OBJECTIVES
shareholders with help of GAAP.
focused to stakeholders who are

widely ranged. Same methods are
placed as objectives for IFRS on
behalf of Commercial and Non
commercial entities.
J)FUNDAMENTAL
In the US GAAP outline the GOING
GOING CONCERN AND
CONCERN conjecture is undeveloped.
ACCRUAL is assumptions which
ASSUMPTION
are underlying and it fames the

IFRS.
GAAP has established a command of
K)QUALITATIVE
chains of certain characteristics like
According to the IASB framework
UNIQUENESS
comparability along with
it states that the purpose about the
understandability, reliability,
decision which cannot be mean t
significance.
upon circumstances which are
The primary qualities are significant
specific in favor of individual
and reliable. Comparability is
users with significance, reliability,
secondary. User specific quality treats
comparability along with
the understandability.
understandability.
According to US GAAP frame an asset
The IRFS structure defines an
may be defined as a gain through future
asset as out looked economic
economic aspects.
benefit which acts as a source
L)DEFINITION OF
AN ASSET
through which the companies

acquire gains.

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GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES)

IFRS (INTERNATIONAL FINANCIAL REPORTING

Generally Accepted Accounting

International Financial Reporting

International Financial Reporting

Standards is a common globalised

Principles is a customary structure of

language in support of interactions

financial accounting guideline used in

performed in a business so that the

every jurisdiction; which is also called

accounts of the company are easily

accounting standards or standard

liabilities, profits, losses along with

Balance sheet, statement of

income, equity variations,

income, comprehensive income

statement of cash flow along with

statement, equity variation, statement of footnotes.

cash flow along with footnotes.

Last in, first out, first in, first out, cost

First in, first out, cost according to

according method of weighted average.

method of weighted average.

Certain criteria are there under

Non attendance of a standard or

On the other hand Under IFRS, the

analysis applied for an issue has no

management of the company

stipulation which clearly requires

clearly requires the framework to

management under US GAAP or

Wide ranges of specifically focused

It also provides relevant

information are provided to the

information which is broadly

shareholders with help of GAAP.

focused to stakeholders who are

In the US GAAP outline the GOING

GOING CONCERN AND

CONCERN conjecture is undeveloped.

ACCRUAL is assumptions which

are underlying and it fames the

chains of certain characteristics like

According to the IASB framework

comparability along with

it states that the purpose about the

decision which cannot be mean t

upon circumstances which are

The primary qualities are significant

specific in favor of individual

and reliable. Comparability is

users with significance, reliability,

secondary. User specific quality treats

comparability along with

According to US GAAP frame an asset

The IRFS structure defines an

may be defined as a gain through future

asset as out looked economic