ACCOUNTING FOR

MANAGERS
What is GAAP
Generally Accepted Principle are set of rules and
regulations through firms and corporations prepare
and present their assets and liabilities and all incomes
and expenses in financial statements
Why these priniciples are necessary to follow?
 IMPORTANCE OF GAAP

*LANGUAGE OF BUSINESS : GAAP Are said to be language of business as

these communicate financial results to the stakeholders

*STANDARDIZE : All the companies follow the standard process for

preparing financial statements

*COMPARABILITY : Standardizing financial statements helps in comparing

one company with other

*COMPANY PERFORMANCE : It ensures that companies provide true and

correct information

*RELEVANCE: GAAP trim information to be revealed without compromising

accuracy and transparency *RELIABILITY : Statements become reliable for
verification and also to assist management

*KEEPS A CHECK ON CHECKING : GAAP ensures that companies comply

with its principles and reveal all relevant information
The 5 important principles
of GAAPare as below:
Principles of regularity
Principles of consistency
Principles of sincerity
Principles of non compensation
Principles of continuity
These principles help ensure
transparency, accuracy, and
consistency in financial reporting.
International Financial Reporting Standards (IFRS)

The History of International Financial Reporting

Standards (IFRS)*The need for international
accounting standards emerged after World War II,
as international trade and investment grew.*Early
efforts towards standardization included the
creation of the International Accounting Standards
Committee (IASC) in 1973

Why is IFRS introduced?

IFRS are designed as a common global language for
business affairs so that company accounts are
understandable and comparable across
international boundaries
What is IFRS?
•IFRS stands for International Financial Reporting
Standards

• IFRS her designed as a common global language

for business affairs so that company accounts are
understandable and comparable across
international boundaries

• The rules to be followed by accountants to

maintain books of accounts which is comparable
understandable reliable and relevant as per the
users internal are external
Improves quality of information necessary for
management decision
Benefits of IFRS
• Increase credibility and reliability of financial statement
especially in cross border transactions

•Comparability of financial statement at both National and

International levels

• Easy access to technical support given the widespread

adoption around the world

• Career mobility of accounting professionals* Improves

quality of information necessary for management decision
 Key concepts of IFRS
1.Accrual basis of accounting: IFRS requires that transactions
and events are recorded when they occur, regardless of when
cash is exchanged

2.Going concern: Financial statements are prepared on the

assumption that the entity will continue to operate in the
foreseeable future unless there is evidence to contrary.

3.Materiality: Similar to GAAP, materiality is a key concept in

IFRS, requiring that only significant information that could
influence decisions is included in financial statements
.
4.Comparability: IFRS aims to provide financial information that
is comparable across different entities, industries, and
jurisdictions.

5.Pragmatism: IFRS allows for practica solutions and judgment

in applying accounting standards to complex transactions
6.Understandability: Financial statements
prepared in accordance with IFRS should
be clear and understandable to users who
may not have a deep understanding of
accounting principles.
Submitted by
Rupica
Divyashree
Navya p v
Chandana
Akshatha
Mahalaxmi