Question & Answer: • Explain the relationship and differences between the accounting data reported on the in…..

1)

Income statement and cash flow statement both are helpful in measuring the performance of a company for the period,cash flow statement is helpful in the analysis of the cash and cash equivalent acounts but income statement is based on the accrual system of accounting, it consists of both cash and non cash items, but cash flow statement willl not consider the non cash items and cash flow sattement is helpful in finding the operating, investing and financing activities and income statment is helpful in finding the net income for the period but the main common between these two is performance measurement.

2)

Difference between US GAAP and IFRS income statement

1. There is no specific format is specified for the income statement for IFRS, but there is specific formats are specified, that is single step and multi- step income statement.
2. Extraordinary items are prohibited under IFRS but there is a line item as per GAAP for extraordinary items.
3. Exceptional items are disclosed separately in case of IFRS but there is no such requirement under US GAAP.
4. Revenue recognition is made based on the economic benefits of the transaction in case of IFRS, but as per GAAP revenue is recognized based on occurrence of exchange transaction.
5. Expenses and losses are recognized based on corridor approach under GAAP but as per IFRS corridor approach is prohibited.