Top Five Accounting Books: IFRS and US GAAP
Today Financial Statements are prepared based on two world largest accounting standards: IFRS and US GAAP. Some countries require the companies that operate in their jurisdiction to use their local GAAP as the framework to prepare the Financial Statements.
Yet, most of the countries have adopted IFRS and stop using the local GAAP. US GAAP also steps by step to adopt IFRS.
The full name of IFRS is International Financial Reporting Standard and this standard is developed by IASB on the principle basis while US GAAP, Rule-Based, is published by Financial Accounting Standards Board and adopted by U.S. Securities and Exchange Commission.
For example, if your entity’s Financial Statements are prepared based on IFRS, you should have a good understanding of the key principle of each standard in IFRS.
To ensure that the Financial Statements are complying with the standards, it is required us to have very good knowledge not only about the technique on how to prepare them.
But also require to have the technical knowledge in those accounting standards.
Otherwise, you have probably recognized the transaction and event incorrectly in the statements.
The following are the top five best selling GAAP and IFRS guide books which established by well know international publishers. They are not only easy to use and understand, but also have a clear explanation to help us deal with the difficult accounting treatment.
Here are they,
#5: Wiley IFRS 2019:
Wiley Interpretation and Application of IFRS Standards (Wiley Regulatory Reporting) is one of the best IFRS Guide books that you should have in 2019 if you want to get a better understanding of IFRS. Here is the importance of things about this great book:
- Understand the framework that unifies the IFRS
- Interpret and apply the standards correctly
- Verify compliance and completeness
- Get expert guidance on implementing the new and updated standard
- IFRS for SMEs
- and IFRS use in the USA
This book will guide you step by step along with the practical example that could help you gain a better understanding of the complicate standard easily.
Like many other professionals, when they read the standard, sometimes they don’t even know where to standard, and how to deal with accounting treatments.
This book, by the way, makes you don’t feel like that after you complete the topics. It is easy to understand, and the examples are practical.
#4: GAAP Guidebook 2019
US GAAP is one of the most complicated accounting standards and frameworks. Having knowledge about US GAAP might not help you to solve some problems in your daily practice.
This book will guide you step by step on how to deal with US GAAP standard sand good new examples that you might never meet before.
GAAP Guidebook also stands in the number one bestseller accounting books related to the GAAP guidebook. As you know, GAAP has many different sources and thousand of documents, in this GAAP Guidebook, it provides you with all of those thousand documents in one package.
Easy to understand with good examples and explanations. This book is trying to help you to master and have excellent knowledge in US GAAP.
This version is not the first publication. It was first published a long time and this version develops based on the reader’s feedbacks incorporate with new technologies that could help you feel hungry to learn.
If you looking for the IFRS book that is easy to read and understand with the complete set of standards, then IFRS For Dummies should be one of the best on your list. IFRS For Dummies 2019 is also good for those who wish to apply IFRS for the first time adoption for their financial reporting.
IFRS For Dummies always stays at the top of my favorite book just like its reputation. This book will teach you how to apply each IFRS standard with very good example and step by step explanation.
IFRS is changing from year to year, and it is your responsibility to make sure that you have up to date knowledge and know-how to apply them. This book is writing to help you with this.
Most of the readers are accountants, auditors as well as students dealing with accounting standards. They bought the book and back to rate as five stars. This is because the book provides them detail explanation, good examples, and practical recommendations.
Wiley Not-for-Profit GAAP is the best GAAP that tailoring for Not-for-profit organization which provides you with the best explanation on how to apply GAAP with a not-for-profit organization. Wiley Not-for-Profit GAAP provides friendly guidance with easy to use.
Accounting for Not for profit organisations might also be as difficult as accounting treatment for profits organisations.
And if you are working in the Not for profit organization and facing the difficulty of dealing with the accounting treatment, then this book is recommended for you.
Also, if you are a student and now dealing with this kind of accounting treatment, you may want to check this book and see how it could help you.
There are many versions of the book and this one is last updated. The book included and respond to all feedback from customers and making sure that the customers get the best experiences. Last the result, the book gets the best support from customers.
” I love the book published by Wiley. It helps me to understand the difficult topics. This Wiley GAAP Book 2017 also plays the same role. It helps me a lot in dealing with complicate accounting treatment like IFRS 9″.
This is what the customer who purchase this book and back to rate for it. The book is published in 2016 but still stands in the best seller for 2017. Wiley GAAP could be purchased on Amazon.
Financial statements are the reports of the entity’s financial transactions and events, and they are prepared and used for many different purposes. In general, there are five types of financial statements and those statements contain five elements on these statements.
These statements and elements are prepared and presented for their own different purposes and provide users with different information.
In this article, we will explain to you the detail of the purpose of Financial Statements according to the financial frameworks which are issued by IASB as well as real-world practice.
Before going to detail on the purpose of financial statements, let see what are the five types and elements of financial statements. Being aware of these things could help you have a better understanding of why entities establish these kinds of statements.
The five types of Financial Statements are:
- Income Statement or Statement of Financial Performance
- Balance Sheet or Statement of Financial Position
- Statement of cash flow
- Statement of change in equity
- Notes to financial statement
Check here for detail, Five types of Financial Statements (Completed Set)
Five elements of Financial Statements are:
Check here for detail, 5 Main Elements of Financial Statements: Assets, Liabilities, Equity, Revenues, and Expenses
The individual statement and element tell the users different information. For example, the purpose of the income statement is to tell users about whether the entity makes profit or loss.
The purpose of the balance sheet is to inform the users about the number of assets that an entity has, the liabilities that entity owe, and the amount of its equity. In other words, it lets users know the entity’s financial situation.
This financial information is very important to many users because it helps them gain a better understanding of the company so that they can make the right decision.
And to make sure that users received the right information, there is much enforcement from the accounting body as well as the law.
Now, let move to the purpose of financial statements and what kind of information that the users could obtain from, to help them to make the correct decision.
Here are the three main purposes:
1) Provide an entity’s financial information:
The main purpose of Financial Reporting is to provide the entity’s financial information. This is the first objective of financial statements that been stated in the conceptual framework.
Generally, if the entity’s financial statements are prepared based on IFRS, then the entity required to prepare and present these five statements of its financial statements.
- Statement of Financial Position
- Income Statement
- Statement of Cash Flow
- Statement of Change in Equity
- Related Note to Financial Statements
Individual Purpose of these Statements:
The above financial statements will help the users to obtain the importance of financial information of entity that could help them in decision making. These statements will be shown the important information of entity like assets, liabilities, equity, and profile or loss during years as well as much other useful information.
Such information also presents in the Annual Report or sometimes highlights in CEO and Chairman Statements. Conceptual Framework required the entity to prepared all of these statements along with the explanation if required.
The individual statement offers the users different information and value;
- For example, in the statements of financial position, the users could see and understand about entity’s assets, liabilities, and equities. With that information, the users can primarily assess how financial healthiness the entity is.
- Income Statement provides the users about how much the entity generates the sales revenues for the reporting period, along with other important information like the cost of goods sold, gross profits, and more importantly, the net incomes for that period of time.
- Statement of change in equity, on the other hand, tells the users about the entity’s equity information along with the changing of equity for the period as the result of the entity’s performance. This statement also informs the users how much the shareholders injected their funds into the entity.
- The statement of cash flow by the ways helps the users to understand the cash flow of entity and cash balance at the end of the period.
Okay, now let move to the second purpose of financial statements,
2) Assist existing and potential investors:
There is so much information related to the target companies that investors need to obtain and assess whether they should invest in, increase the existing investment, or withdraw their investment.
Financial Statements are the primary sources of information that could help investors to get most of the financial information for their assessments and decision.
If they want to know how financially stable the company is, financial statements are probably the primary sources of information that could help your assessment.
Both existing and potential investors normally use the financial statements to analyst and breakdown into potential investments decision.
For example, investors can assess the entity’s profitability against the entity’s competitors. They also use the entity financial leverages to assess the likelihood of return on debtors and shareholders.
Investors can also use the entity’s financial information to assess the going concern.
For these reasons, IASB is working so hard to make sure that all of the necessary information is disclosed in the financial statements.
3) Oversee the entity’s prospective future net cash inflows:
The purpose of financial statements does not only provide the users to know how well or bad the entity financial position is, or how big or small the entity.
They also prepare for the purpose of helping the user, especially the investors in predicting the entity’s future cash flow.
The potential and existing investor could use the financial statements to assess the potential adverse effect on the company’s perspective on cash flow.
And how management and directors use the company’s resources effectively and efficiently. That is the reason why there are so many disclosures require on the financial statements.
Financial Reports could not tell everything about the companies to its existing and potential investors or its related stakeholders. But IASB tries to make sure that the minimum information of the company that those stakeholders should know is available for them.
On the paragraph OB11 of The Conceptual Framework, it said that
“To a large extent, financial reports are based on estimates, judgments and models rather than exact depictions. The Conceptual Framework establishes the concepts that underlie those estimates, judgments and models. The concepts are the goal towards which the Board and preparers of financial reports strive”.
4) Additional Purposes Financial Statements:
- Help creditors to assess the creditworthiness of the entity. Normally, the process of evaluating the credit score requires both financial and non-financial information. For financial perspective, financial statements contain much beneficial information to assist this.
- Help employees to assess the stability of its entity. Employees want to see the company that they working to run forever. They want to secure their job. If they could assess the company’s financial statements, they will access
- Help the government agency to assess the tax return. Most of the entity requires to pay corporate tax and General Tax Department needs the financial statements of an entity to assess whether tax has been completely collected.
- Help bankers to make risks assessment. Bankers and creditors need the entity’s financial statements to assess the ability to pay the debt.
- Users by competitors to assess the competitiveness in terms of financial straight.
5) Users of Financial Statements:
- Shareholders: Shareholder can be individual who has 100% shares in the company or the group of people that own the shares in the company. They use the financial statements for the purpose of investment assessment.
- Potential Investors: Some of the companies publish their audit report
- Board of directors
- Government body (tax division)
In summary, the main purposes of financial statements are to provide entity financial information to the group of potential stakeholders to help them make the correct decision.
The correct entity financial information is provided to the users only they are present in true and fair view and in accordance with the relevant accounting framework.