Last updated on Apr 10, 2024
- All
- Cost Accounting
Powered by AI and the LinkedIn community
1
GAAP Basics
Be the first to add your personal experience
2
IFRS Overview
Be the first to add your personal experience
3
Tax Basis
Be the first to add your personal experience
4
Cash Basis
Be the first to add your personal experience
5
Special Purpose
Be the first to add your personal experience
6
Regulatory Requirements
Be the first to add your personal experience
7
Here’s what else to consider
Be the first to add your personal experience
In the world of accounting, financial reporting frameworks are essential for presenting a company's financial information in a clear, consistent, and comparable manner. These frameworks serve as a set of guidelines that govern the preparation and presentation of financial reports. They ensure that the financial statements are useful to users, such as investors, creditors, and regulators, who rely on them to make informed decisions. Understanding the different types of financial reporting frameworks can help you appreciate the diversity and specificity of accounting practices across various jurisdictions and industries.
Find expert answers in this collaborative article
Experts who add quality contributions will have a chance to be featured. Learn more
Earn a Community Top Voice badge
Add to collaborative articles to get recognized for your expertise on your profile. Learn more
1 GAAP Basics
Generally Accepted Accounting Principles, or GAAP, is a framework widely used in the United States. It consists of a combination of authoritative standards set by policy boards and the commonly accepted ways of recording and reporting accounting information. GAAP improves the clarity of the communication of financial information and ensures that a company's financial statements are comparable and consistent over time. This framework is essential for companies that are publicly traded or are seeking to issue credit.
Help others by sharing more (125 characters min.)
2 IFRS Overview
The International Financial Reporting Standards (IFRS) are designed to bring consistency to accounting language, practices, and statements on a global scale. Developed by the International Accounting Standards Board (IASB), IFRS provides a common language for international finance, enabling businesses and accounts to understand and compare company accounts across international boundaries. This is particularly useful for companies with subsidiaries in different countries or for those looking to attract foreign investors.
Help others by sharing more (125 characters min.)
3 Tax Basis
A tax basis financial reporting framework is one that companies use to prepare their financial statements in accordance with the rules of their respective tax authorities. This framework is less about providing information to investors and more about compliance with local tax laws. It can significantly differ from GAAP or IFRS because it focuses on taxable income and tax liabilities rather than providing a broader view of a company's financial health.
Help others by sharing more (125 characters min.)
4 Cash Basis
Cash basis accounting is a simple financial reporting framework where revenues and expenses are recognized only when cash is received or paid. Unlike the accrual basis, which is required under GAAP and IFRS, the cash basis does not recognize accounts receivable or payable. This framework might be suitable for small businesses or organizations without complex financial transactions because it provides a straightforward view of cash flow.
Help others by sharing more (125 characters min.)
5 Special Purpose
Special Purpose frameworks are tailored for specific types of businesses or industries that have unique financial reporting needs. These frameworks may deviate from standard accounting principles to better serve the particular requirements of an industry. For example, government entities, non-profits, and certain financial institutions may use special purpose frameworks to provide more relevant financial information for their operations.
Help others by sharing more (125 characters min.)
6 Regulatory Requirements
Lastly, some industries are subject to specific regulatory requirements that dictate their financial reporting. These requirements are often established by government agencies to ensure transparency and protect stakeholders in industries where financial reporting might otherwise be opaque or not standardized. Companies in sectors such as banking, insurance, and utilities typically fall under these regulatory frameworks, which can be as rigorous as GAAP or IFRS.
Help others by sharing more (125 characters min.)
7 Here’s what else to consider
This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?
Help others by sharing more (125 characters min.)
Accounting
Accounting
+ Follow
Rate this article
We created this article with the help of AI. What do you think of it?
It’s great It’s not so great
Thanks for your feedback
Your feedback is private. Like or react to bring the conversation to your network.
Tell us more
Tell us why you didn’t like this article.
If you think something in this article goes against our Professional Community Policies, please let us know.
We appreciate you letting us know. Though we’re unable to respond directly, your feedback helps us improve this experience for everyone.
If you think this goes against our Professional Community Policies, please let us know.
More articles on Accounting
No more previous content
- Here's how you can switch from finance to accounting seamlessly. 5 contributions
- Here's how you can handle a layoff in accounting when composing a thank-you letter post-interview. 1 contribution
- Here's how you can overcome the implications of lacking logical reasoning skills in an accounting career. 1 contribution
- Here's how you can enhance financial reporting accuracy through collaboration. 3 contributions
- Here's how you can explore diverse career paths as an Accountant in the public sector.
- Here's how you can turn your accounting internship into a full-time job.
- Here's how you can address weaknesses in your accounting performance using feedback.
- Here's how you can track the key financial metrics for business growth in accounting. 5 contributions
- Here's how you can earn recognition from your accounting boss.
No more next content
More relevant reading
- Accounting What is included in a financial reporting framework?
- Corporate Accounting You're interviewing for a corporate accounting job. What's the one thing you must know?
- Business Services What are the most important financial reporting requirements for small businesses?
- Accounting What do you do if you want to revolutionize financial analysis in accounting?
Help improve contributions
Mark contributions as unhelpful if you find them irrelevant or not valuable to the article. This feedback is private to you and won’t be shared publicly.
Contribution hidden for you
This feedback is never shared publicly, we’ll use it to show better contributions to everyone.