Essay About Gaap Method And Gaap Uses Of Balance Sheets

Ifrs Vs. Gaap
IFRS Vs. GAAPSamantha AdamsACC/290Monday February 8th, 2016Marni DanhauerIFRS Vs. GAAPWhen it comes to finances some would say it’s complicated. However, with todays’ decision would lead to the question “Should the U.S. turn away from the GAAP method to eventually use the IFRS?” This seems to be an interesting topic that is offered. Although each of the GAAP and IFRS both have similarities and distinct differences. Generally Accepted Accounting Principles (GAAP) is a framework of accounting standard, rules, and procedures defined by the professional accounting industry, which has been adopted by nearly all publicly traded U.S. companies. Now with the definition for GAAP is above there is the basic understanding of what the purpose for the GAAP is and how it works.International Financial Reporting Standards (IFRS) is a set of accounting standards developed by an independent, not-for-profit organization called the International Accounting Standard Board (IFSB). In order to understand what each does one must understand the definitions. In most companies in the U.S. use the GAAP and have for periods of time to help determine net profit and much more.If one compares the two side by side, it is visible of the similarities and very few differences. It is the way that GAAP/IFRS both use the COGS to help determine final sales and revenue. However, it is more complex than it sounds. Even though the two are very similar in multiple ways, it is also very different.

GAAP uses of Balance sheets to determine what has been credit or debit to the account in a period of time. This would breakdown the company’s finances in a list of numbers. As for the IFRS it does not consist of a balance sheet but the use of COGS, cost of gods sold, to give a number of profits and losses.“Though interpretation differences have merged. As a general rule of, IFRS standards are more broad and ‘Principles-Based’ than their U.S. counter-parts, with limited interpretive guidance.” Quality in Everything We Do, Ernst and Young. “When it comes to the differences of balance sheets and income statements for the GAAP: that no general requirement within the U.S. GAAP to prepare a balance sheet and income statements in accordance with a specific layout; however, public companies must follow the detailed requirements in Regulations S-X.” Quality in Everything We Do, Ernst and Young.“For the IFRS layout of balance sheets and income statements the IAS 1 Presentation of Financial Statements does not prescribe a standard layout, but includes a list of minimum items. These minimum items are less prescriptive than the requirements in the Regulations S-X” Quality in Everything We Do, Ernst and Young.