Final answer:
The two frameworks for preparing F|S are GAAP and IFRS. GAAP, used in the U.S., is more rules-based, while IFRS, adopted internationally, is principles-based. Differences include accounting methods for inventory, revenue recognition, and asset valuation.
Step-by-step explanation:
The two current frameworks for preparing financial statements (F|S) are the Generally Accepted Accounting Principles (GAAP) and the International Financial Reporting Standards (IFRS). GAAP is a set of accounting principles used primarily in the United States, emphasizing a more rules-based approach to accounting. In contrast, IFRS, used by many countries outside of the United States, adopts a principles-based approach, providing greater flexibility and requiring more professional judgment in its application.
One noteworthy difference between GAAP and IFRS is how they handle inventory accounting. Under GAAP, companies can use the Last-In, First-Out (LIFO) method, which is not allowed under IFRS. There are also differences in the recognition of revenue and the valuation of assets between the two frameworks, with IFRS generally allowing for fair value measurements more extensively than GAAP.