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GAAP vs. IFRS: Recording Differences definitions Flashcards

GAAP vs. IFRS: Recording Differences definitions
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  • GAAP
    A set of accounting rules established by FASB, primarily used in the US, emphasizing consistency and historical cost.
  • IFRS
    A global set of accounting standards created by the International Accounting Standards Board, allowing more frequent asset revaluation.
  • Financial Accounting Standards Board
    The US organization responsible for developing and maintaining generally accepted accounting principles.
  • International Accounting Standards Board
    The international body that sets accounting standards used in many countries outside the US.
  • Journal Entry System
    A method of recording business transactions using debits and credits to track financial activity.
  • Debits
    Entries on the left side of an account, typically increasing assets or expenses and decreasing liabilities or equity.
  • Credits
    Entries on the right side of an account, usually increasing liabilities or equity and decreasing assets or expenses.
  • Trial Balance
    A list of all accounts and their balances at a specific time, used to verify that total debits equal total credits.
  • Historical Cost Principle
    An accounting guideline requiring assets to be recorded at their original purchase price, regardless of market changes.
  • Fair Value Principle
    A rule allowing assets to be reported at current market value, providing more up-to-date financial information.
  • Short-Term Investments
    Assets expected to be converted to cash within a year, often valued at fair market value under both GAAP and IFRS.
  • Property, Plant, and Equipment
    Long-term tangible assets such as land and buildings, subject to revaluation under IFRS but not typically under GAAP.
  • Unit of Measure Principle
    A concept requiring all financial transactions to be recorded using a consistent currency throughout the accounting records.
  • Assets
    Resources owned by a business, including cash, inventory, and property, listed on the balance sheet.
  • Liabilities
    Obligations or debts owed by a business to outside parties, reported on the balance sheet.