International Accounting (Comparison) Research Paper

International Accounting (Comparison) - Research Paper Example The accounting standards form the principles for the preparation and presentation of financial statements created by the International Accounting Standards Committee (IASC). The research paper highlights the major areas of similarities and differences between Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). The objective of this research paper is to find out those particular differences that are believed to be mostly encountered during practice. The name itself suggests that the contents of the theory will describe certain principles that are needed to be followed in accounting but despite this GAAP acts as a very important facilitator for investors and companies. GAAP is basically a set of procedures and standards that companies follow in order to present their financial data. Companies follow those standards as these provide them a precise mode of representation of their financial figures which is good for the analysts as it becomes hard for the company to trick them by manipulating their figures. 1 IFRS has gained popularity in recent times and has been well accepted by a huge number of countries in the world. Previously, the multinational companies had to prepare separate financial statements for each country where they had their areas of operations but IFRS has made the task easier. In IFRS the guidelines and standards are set by International Accounting Standards Board (IASB) that companies and organizations can follow when compiling financial statements. It was previously called the International Accounting Standards (IAS). IFRS provides guidance to prepare financial statements.2 In order to enumerate the advantages of any accounting principle, it is important to analyze the components of it at the outset. The main components of GAAP are: Inventory costs, Debt, Stockholder’s equity, short term