The document compares the presentation of financial statements under International Financial Reporting Standards (IFRS) and Generally Accepted Accounting Principles (GAAP) used in the United States. It notes that IFRS balance sheets often list assets in reverse order of liquidity compared to GAAP and allow equity to be listed before liabilities. For income statements, GAAP requires 3 years of data while IFRS only requires 2. IFRS also allows more flexibility in expense classification. For statements of cash flows, GAAP classifies certain items like interest as operating cash flows while IFRS provides two options for classification.

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IFRS vs GAAP
Statement of Financial Position
 Statement of Financial Position (Balance Sheet) prepared under IFRS often
classifies accounts in reverse order of liquidity (lack of nearness to cash), which
is the opposite of what the US companies do. E.g. intangible assets are typically
listed first and cash is listed last among assets. Also, equity is often listed before
liabilities, where as liabilities are again listed in order of decreasing liquidity.
These choices reflect convention and not IFRS requirements.
Income Statement
 The most visible difference is that GAAP requires three years’ data on the
income statement whereas IFRS requires only two.
 GAAP income statements classify expenses by function and must separately
report expenses applicable to revenues (cost of goods sold), whereas IFRS
permits expense classification by function (cost of sales, selling and
administrative, etc.) or by type (raw materials, labor, depreciation, etc.). This
means, for example, that under IFRS, there is no requirement to report a cost of
sales figure.
Statement of Cash Flows
 GAAP-based statement of cash flows classifies interest expense, interest
revenue, and dividend revenue as operating cash flows, and dividends paid as
financing cash flows.
 IFRS allows firms to choose from between the following two options:
 Classify interest expense, dividends paid, interest revenue, and dividend
revenue as operating cash flows, or
 Classify interest expense and dividends paid as financing cash flows, and
interest revenue and dividend revenue as investing cash flows.
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