Question

Distinguish between the GAAP and IFRS standards for internal control.

Answer 1

Diffenece Between GAAP and IFRS standards for internal control.

- GAAP stands for Generally accepted accounting principles. IFRS stands for International Financial reporting standards.

- IFRS are globally accepted accounting standards which is used by many countries for the preperation of financial statements.GAAP are the set of accounting principles which are used only in United States for the preperation of financial statements

- GAAP are formed by Financial Accounting Standard Board. However, IFRS are developed by International accounting standard board.

- If we talk about Inventory method, GAAP uses FIFO, LIFO and weighted average method, However IFRS uses FIFO and weighted average method.

- Under IFRS, etraordinary items are not segregated in the income statement, while under GAAP, extraordinary items are shown under the net income.

-GAAP are rule based, and IFRS are principle based.

-GAAP prohibits the reversal of inventory. But it is permissable under IFRS only when some specific conditions satisfy.