GAAP vs. IFRS

None of us deny the fact that 1929 slump was biggest crash in the history of U.S economy. It gave hard lesson to U.S economy. The recession occurred due to the lack of organization and accountability between companies. The country’s government, banking sector and monetary institutions are trying to learn lessons from their past economic meltdown. They are implementing reliable and competitive monetary strategies to operate businesses and industries.

The word GAAP refers to generally accepted accounting principles. It is composed of business rules and regulations. All the businesses and financial management companies are required to follow the basic accounting rules and keep the truthful information of the financial record. GAAP (Generally Accepted Accounting Principles) shows you how to comprise profitability and account for full disclosure of financial information. It also shows you how the accounting principles are matching with each other. That is why GAAP creates a trustworthy between the people and business management companies.

The word IFRS generally refers to International Financial Reporting Standards. Although IFRS is related to GAAP but it is accepted across the world between foreign trade institutions and companies. The IFRS emerged from London, United Kingdom and is prevailing in 100 countries in the world today. It is not applicable in United States of America. There are similarities between GAAP and IFRS. These two topics have been the debating point for accountants and investors in recent times. These methods are useful guidelines for accountants and investors.

There are a lot of challenges for them in these two combing methods. The evaluators will have to change the line of attack, testing the material for accounting majors and adopt an affective accounting strategy to tweak the standards. This is hot topic among international business community whether two combing methods GAAP and IFRS are worth the time, valuable and sustainable. Money can make the difference.

GAAP is comprised of requirements and guidelines the businesses in U.S follow the rules strictly. Some changes and modifications have been done in the generally accepted accounting principles in recent times. This emerges Zeff for modern business through which accountants and investors resolve their financial matters.

Both GAAP and IFRS are similar methods. The international financial reporting standards are comprised of rules and regulations that are open to interpretation or analysis. In GAAP, the principles are not open to interpretation or analysis. This is the major difference between these two combing methods.

The U.S GAAP is comprised of 17,000 pages of rules. This confidentially describes what is expected of businesses (Pratt). On the other hand, IFRS is composed of 2500 pages. Therefore it must be decided that which methods suits to consumers and investors. Overall GAAP and IFRS have similarities.