GAAP vs. IFRS: Receivables

Alright, let's discuss some of the similarities and differences between gap and offers when it comes to receivables. So remember Gap, that's what we're focused on in this course, we've got our generally accepted accounting principles and those are the rules here in the US and they're set by the Financial Accounting Standards board. They are the ones who create Gap and overseas internationally. Well, there's the international financial reporting standards offers and that's created by the International Accounting Standards Board. They're the ones they're creating Ifor's overseas. Okay. So there's gonna be some key similarities and differences. For the most part, a lot of the rules are the same but we've got some key differences as well. So let's see with receivables some of the key similarities and differences. So similarities the record keeping for receivables. And we also touched upon sales returns and allowances and discounts those types of things. For the most part, they're gonna be exactly the same. Right? We're gonna have receivables, we're gonna have our allowance for doubtful accounts. These are all very important accounting concepts that transcend between gap and differs. And just like we just mentioned, we will impair our receivables right, when they're unlikely to be collected. So, these bad debts. Well, in both cases we're gonna be impairing those receivables. Let's notice some of these differences though. This is kind of interesting that has no strict rules for separate recording of receivables. So when we're talking about an account receivable interest receivable in gap, they're very strict about the titles of each account differs, isn't as strict although you want to be as transparent as possible. Right? That's one of the main goals of accounting is to be transparent, but there's no strict rules when it comes to offers for that. Another thing which is about kind of beyond the scope of this course. But the idea here when we're factoring receivables and factoring basically means selling our receivables. Well, there's some different criteria when it comes to gap and lifers in the rules that we follow when we account for these things. So selling receivables, you can think about this when we have some receivables on our book, customers owe us money. Well, there's going to be companies that will collect that money on our behalf and give us cash. Now if we're in a cash crunch, well we could get cash and we can sell the receivables to another company and then they'll collect the money whenever the customers pay and of course we'll get a little bit less cash now because we are selling these receivables and they're taking on basically the risk of collecting. So it speeds up our cash collection. That's why we're factor. But in the end Gap and lifers have some slightly different rules there that are beyond the scope of this course. Okay, so that's about it when it comes to receivables. Let's go ahead and move on to the next vid