ACC 557 Week 9 DQ1
ACC 557 Week 9 DQ1
"Cash Flow Reporting" Please respond to the following:
Given the complexities related to preparing and interpreting the statement of cash flow, evaluate the current requirement under GAAP and IFRS, indicating improvements that you would make to each method’s requirement to better serve the users of the information. Provide a rationale for your changes.
Analyze the impact of erroneous classifications in the Operating Activities section of the statement of cash flows, detailing how the distortion can impact the decisions made by financial statement users. Suggest how these errors may be minimized
There are definitely some very distinct differences in the requirements of the GAAP and IFRS preparation and interpretation of the statement of cash flow. Under the IFRS the statement of cash flow is “required for most entities” while the GAAP states that “statement of cash flow is required for all entities” (Epstein, 2010). By the IFRS not requiring a statement of cash flow for all entities it can be difficult to set a common standard for all companies. As an improvement to the IFRS’s requirement I would recommend requiring that a statement of cash flow be completed for ALL entities without exception. This would help to establish a standard for all entities and would minimize the variations of the entities that have a statement of cash flow report. Another major difference between the manner in which IFRS requires you report on a statement of cash flow and the manner in which GAAP reports on a statement of cash flow is that under IFRS requirements, “overdrafts cannot be included in cash and have to be shown as a financing source of cash while the GAAP states that “ overdrafts can be included in cash under de-fined conditions” (Epstein, 2010). As far as the way that the GAAP require you report overdrafts I can’t see a better way to report this than the method that is already in place, but as for the IFRS method it would more helpful and easier to
"Cash Flow Reporting" Please respond to the following:
Given the complexities related to preparing and interpreting the statement of cash flow, evaluate the current requirement under GAAP and IFRS, indicating improvements that you would make to each method’s requirement to better serve the users of the information. Provide a rationale for your changes.
Analyze the impact of erroneous classifications in the Operating Activities section of the statement of cash flows, detailing how the distortion can impact the decisions made by financial statement users. Suggest how these errors may be minimized
There are definitely some very distinct differences in the requirements of the GAAP and IFRS preparation and interpretation of the statement of cash flow. Under the IFRS the statement of cash flow is “required for most entities” while the GAAP states that “statement of cash flow is required for all entities” (Epstein, 2010). By the IFRS not requiring a statement of cash flow for all entities it can be difficult to set a common standard for all companies. As an improvement to the IFRS’s requirement I would recommend requiring that a statement of cash flow be completed for ALL entities without exception. This would help to establish a standard for all entities and would minimize the variations of the entities that have a statement of cash flow report. Another major difference between the manner in which IFRS requires you report on a statement of cash flow and the manner in which GAAP reports on a statement of cash flow is that under IFRS requirements, “overdrafts cannot be included in cash and have to be shown as a financing source of cash while the GAAP states that “ overdrafts can be included in cash under de-fined conditions” (Epstein, 2010). As far as the way that the GAAP require you report overdrafts I can’t see a better way to report this than the method that is already in place, but as for the IFRS method it would more helpful and easier to