GAAP vs. IFRS: Introduction definitions Flashcards
GAAP vs. IFRS: Introduction definitions
You can tap to flip the card.
Control buttons has been changed to "navigation" mode.
1/15Skip to main content
GAAP A set of accounting rules established by the FASB, primarily used in the USA, known for its detailed, rules-based approach. IFRS International accounting standards set by the IASB, emphasizing a principles-based approach and used in many countries outside the USA. Financial Accounting Standards Board The US organization responsible for developing and issuing GAAP, shaping accounting practices domestically. International Accounting Standards Board The global body that creates and maintains IFRS, aiming for consistency in international financial reporting. Principles-based Approach A flexible method in accounting standards allowing professional judgment and interpretation in applying rules. Rules-based Approach A method in accounting standards characterized by detailed, specific requirements and minimal room for interpretation. Bright Line Standards Clear, quantifiable thresholds in accounting rules that dictate specific treatments based on set criteria. Sarbanes-Oxley Act US legislation enacted to enhance corporate governance and impose stricter requirements on public company reporting. Multinational Corporation A business entity operating in multiple countries, often facing challenges from differing accounting standards. Mergers and Acquisitions Business activities involving the combination of companies, often complicated by varying national accounting rules. Journal Entry System The foundational accounting technique for recording financial transactions in both GAAP and IFRS frameworks. External Users Individuals or groups, such as investors, who rely on financial statements for decision-making but are not part of the organization. Financial Markets Global platforms for trading stocks, bonds, and currencies, increasingly interconnected and influencing accounting standard convergence. Convergence The ongoing process of harmonizing GAAP and IFRS to create a unified set of global accounting standards. Public Company An organization whose shares are traded on stock exchanges and is subject to stricter reporting and auditing requirements.