Question

the two mean sets of accounting standards followed by business are Gaapand IFRS. breifly explain how the balance sheet is formatted under each set??​

Answer 1

Answer:GAAP arranged balance sheet in their order of liquidity. From current asset to non current asset then to current liabilities to non current liabilities and finally to owners Equity. Under IFRS they start with non current asset, then to current asset, then to owners Equity and from owners Equity to non current asset and finally to current liabilities.

Explanation:

A balance sheet is a classified list of the debit and credit balances remaining on the books after the preparation of the trading profit and loss account. The purpose of a balance sheet is to present a true and fair view of the financial position of the business at a given date. Under the GAAP, balance sheet are arranged in their order of liquidity. In other words asset are arranged in the reverse order of their realisability or in their ease of conversion into cash. Under GAAP, current asset comes first followed by non current asset, then followed by current liabilities, then by non current liabilities, and lastly by owners Equity.

Under IFRS, the order accepted by them is that balance sheet should be arranged in reverse order to that of GAAP. They start with non current asset, followed by current asset, then followed by owners equity, then followed by non current liabilities and lastly by current liabilities.