GAAP vs. IFRS: Fraud, Internal Controls, and Cash definitions Flashcards
GAAP vs. IFRS: Fraud, Internal Controls, and Cash definitions
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GAAP A set of accounting standards established by a US board, guiding financial reporting for American companies. IFRS A global framework for financial reporting, developed by an international board, used outside the United States. Financial Accounting Standards Board The US organization responsible for creating and updating the primary accounting rules followed domestically. International Accounting Standards Board The international body that develops and issues accounting standards used in many countries worldwide. Internal Controls Procedures and policies within organizations designed to safeguard assets and prevent fraudulent activities. Fraud Intentional deception or misrepresentation in financial activities, often leading to financial loss or misstatement. Bank Reconciliation A process comparing company records with bank statements to ensure accuracy and detect discrepancies. Cash Funds available for immediate use, typically including currency, coins, and balances in checking accounts. Cash Equivalents Highly liquid investments with maturities of less than 90 days, considered nearly as accessible as cash. Sarbanes-Oxley Act A US law enacted to strengthen internal controls and financial reporting after major corporate scandals. Financial Reporting The process of disclosing financial data to stakeholders, ensuring transparency and accountability. US Stock Exchange A marketplace where shares of publicly traded US companies are bought and sold, subject to specific regulations. Accounting Scandal A major event involving fraudulent or unethical financial reporting, often leading to regulatory changes. Public Company A business entity whose shares are traded on a stock exchange and must adhere to strict reporting standards.
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