Accounting for Managers Assignment

G.PREM KUMAR 122023602001

GAAP (Generally Accepted Accounting Principles)

Generally accepted accounting principles (GAAP) refer to a common set of

accounting principles, standards, and procedures issued by the financial
accounting standard boards (FASB). Public companies in the United States
must follow GAAP when their accountants compile their financial statements.

Principles of GAAP:

1. Principle of Regularity

The accountant has adhered to GAAP rules and regulations as a standard.

2. Principle of Consistency

The consistency principle states that, once you adopt an accounting principle
or method, continue to follow it consistently in future accounting periods. Only
change accounting principle or method if the new version in some way
improves reported financial results.

3. Principle of Sincerity

Accountants should perform and report with basic honesty and accuracy in
accounts.

4.Principle of regularity

This means that all accountants are to consistently abide in regular basis by the
GAAP.

5.Principle of Periodicity

All Entries should distribute across the appropriate periods of time. For
example, revenue should be reported in its equivalent accounting periods.

6. Principle of Materiality / Good Faith

Accountants must strive to fully disclose all accounts of financial data and
accounting information in financial reports.

7. Principle of Non-Compensation
Both positives and negatives must be reported with full clear transparency and
without the expectation of debt compensation.

8. Principle of permanent methods

Accountants must follow same the standard principles and procedures that are
being applied in financial and accounting reporting.

IFRS (International Financial Reporting Standards):

It set common rules so that financial statements can have transparent,

consistent, and comparable across the world. IFRS are issued by the
International Accounting Standards Board (IASB). They specify how companies
must and should maintain and report their accounts, defining types of
transactions, and other events with financial impact.

IFRS Requirements

Statement of Financial Position: It is also known as balance sheet. It influences

the ways in which the components of a balance sheet are reported in financial
statements.

Statement of Changes in Equity: It also known as a statement of retained

earnings, this documents the company's change in profit for the given financial
period.

Statement of Cash Flow: This report summarizes the company's financial

transactions in the given period, separating cash flow into Operations,
Investing, and Financing.

Statement of Comprehensive Income: It consists of two elements the net

income and other comprehensive income. It also provides a summary of
company’s assets over a given period of time.