The Impact of Cash Equivalents on Financial Statements: A Comparative analysis of IFRS and US Gaapa
DOI:
https://doi.org/10.31150/ajebm.v6i5.2188Keywords:
cash equivalents, IFRS, US GAAP, financial statements, classification, presentation, financial ratios, comparability, stakeholders, accounting standardsAbstract
This comparative study examines the impact of cash equivalents on financial statements under IFRS and US GAAP, focusing on the classification criteria, presentation in financial statements, and their effect on key financial ratios. The study finds that while there are similarities between the two accounting standards in the treatment of cash equivalents, subtle differences exist in classification criteria and the presentation of cash flow statements. These differences can impact the comparability of financial statements across companies and jurisdictions, affecting financial ratios and the overall assessment of a company's performance. The study's implications extend to various stakeholders, emphasizing the need for understanding these differences and their consequences on financial analysis and decision-making. By understanding these differences, stakeholders can make more informed decisions, and accounting standard-setters can work towards greater convergence in financial reporting, ultimately improving the transparency and comparability of financial information across companies and jurisdictions.
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