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Accounting Standards Overview

GAAP provides accepted accounting practices and guidelines for recording transactions, preparing financial statements, and communicating financial information. It allows for different accounting treatments but derives accounting standards. IFRS were developed to provide consistent global standards for financial reporting to make companies more comparable internationally and encourage cross-border investment and trade. Adopting IFRS has benefits like more reliable financial information for investors and preparing statements using global standards.

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41 views2 pages

Accounting Standards Overview

GAAP provides accepted accounting practices and guidelines for recording transactions, preparing financial statements, and communicating financial information. It allows for different accounting treatments but derives accounting standards. IFRS were developed to provide consistent global standards for financial reporting to make companies more comparable internationally and encourage cross-border investment and trade. Adopting IFRS has benefits like more reliable financial information for investors and preparing statements using global standards.

Uploaded by

SreeranjPrakash
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd

GAAP comprises of conventions, rules and procedures that constitute

accepted accounting practices at any given point of time. There are different ways
in which accounting treatment can be done for a transactions or events.
Significance of GAAP

 GAAP differs from country to country. GAAP should not defeat the provisions of
law in a particular country. Hence it is subject to local rules and regulation

GAAP applies to the whole accounting process beginning from recording the
transactions till the communication of accounting and financial information to end
users
It gives broad guidelines regarding the rules to be followed while preparing
financial statements. There are numerous accepted laws, rules , procedures and
practices in forces in a country. Hence it presents alternative accounting
treatments in respect of a particular transactions. For example, closing stock
Valuation, methods of charging depreciation etc

 The base to prepare accounting standards has been derived from GAAP.
IFRS- International Financial Reporting Standards
standards issued by the JFRS foundation and the International Accounting
Standards Board (IASB) to provide a common global language for business
affairs so that they are understandable and comparable from companies to
companies and country to country
Need for IFRS
IFRS are standard in many parts of the world, including the European
Union (EU) and many countries in Asia and South America, but not in the
United States
Countries that benefit the most from the standards are those that do a lot of
international business and investment
It will give more reliability to financial information. Investors will make more
investment in the company as the company follows more transparent
business practices at international level
It enables companies to prepare financial statement as per global standards

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