Compare the Difference Between Similar Terms

Difference Between

Home / Business / Finance / Accounting / Difference Between Indian GAAP and US GAAP

Difference Between Indian GAAP and US GAAP

January 12, 2011 Posted by Andrew

Indian GAAP vs US GAAP

Accounting is an important part of every enterprise, be it small or big. Where ever in the world one trades accounting has to be proper and according to the guidelines set by the government of that place. Basic principles of accounting are same everywhere but there are some differences in it depending on the requirements of the local governing body. GAAP is the term that is universally given to the financial accounting. GAAP is an acronym for Generally Accepted Accounting Principles. GAAP is the terminology used for the preparation of financial statements that are to be submitted, giving details of all the transactions made during a financial year. These financial statements are prepared keeping in mind the accounting laws of the country in which business is being carried out. The basics of Indian and US GAAP are same but there are some differences that should be known to a person having business interests in these two countries.

Indian GAAP

In India, it is the statements issued by Institute of Chartered Accountants of India (ICAI) that form the standards when it comes to Indian GAAP. These standards have to be followed by companies when they come out with their financial statements. Since 1973, the International Accounting Standards Committee (IASC) has suggested 32 accounting standards and it has been observed that India is lagging behind in accepting these standards as norms in accounting. To bring about a harmony in Indian GAAP and the accounting standards in the rest of the world is a challenging task and there has been significant progress in the last few years in this regard.

‘Provide for all losses and anticipate no profits’ is the basic underlying assumption in Indian accounting.

US GAAP

The generally accepted accounting principles or the US GAAP are set of rules that are made use of when preparing financial statements of companies and individuals in United States. In US, government does not set any standards of accounting at it believes that those working in the field have a better understanding of the subject and will come up with corrections wherever required. Currently, it is the statements issued by FASB (Financial Accounting Standards Board) that are accepted as norms by the accounting firms in the country. The provisions in US GAAP are somewhat different from the International Financial Reporting Standards (IFRS).

Difference between Indian and US GAAP

Though Indian accounting has undergone a sea of changes in the last few decades, there are still big differences in Indian GAPP and US GAPP which have often been reported by the US media. With many MNC operating in India and adopting Indian GAPP, they are able to escape by showing fewer profits. Let us see the major differences in the two accounting systems.

• The manner of presenting financial statements in both is different. In Indian GAPP, these are prepared in accordance with schedule VI of the companies Act, 1956, whereas in US GAPP, these are not prepared under any specific format.

• In Indian GAAP, Cash Flow statement is mandatory only for companies whose shares are listed in stock exchanges. Thus companies that are not listed escape this provision. In US GAAP, it is mandatory for every company to present its Cash Flow statement whether it is listed in the stock exchange or not.

• Depreciation in Indian GAPP is calculated according to rates prescribed in the Companies Act of 1956. But in US, depreciation depends on the useful life of the asset.

• In US, the current portion of any long term debt is taken as current liability, while in Indian GAPP, there is no such requirement and hence the interest accrued on this long term debt is not taken as current liability.

Related posts:

Difference Between Accounting and Finance Difference Between Financial Accounting and Management (Managerial) Accounting Difference Between Duty and Tax Difference Between Excise Duty and Custom Duty Difference Between Excise and VAT

Filed Under: Accounting Tagged With: Accounting Principles, FASB, financial statement, GAPP, ICAI, IFRS

About the Author: Andrew

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Request Article

Featured Posts

Difference Between Coronavirus and Cold Symptoms

Difference Between Coronavirus and Cold Symptoms

Difference Between Coronavirus and SARS

Difference Between Coronavirus and SARS

Difference Between Coronavirus and Influenza

Difference Between Coronavirus and Influenza

Difference Between Coronavirus and Covid 19

Difference Between Coronavirus and Covid 19

You May Like

Difference Between Foreign and International

Difference Between Acetic Acid and Glacial Acetic Acid

Difference Between Acetic Acid and Glacial Acetic Acid

Difference Between Proverbs and Quotes

Difference Between Proverbs and Quotes

Difference Between Blue Collar and White Collar

Difference Between Combinational and Sequential Logic

Latest Posts

  • What is the Difference Between de Quervain’s Tenosynovitis and Carpal Tunnel
  • What is the Difference Between Herniated Disc and Piriformis Syndrome
  • What is the Difference Between Spinal Stenosis and Spondylosis
  • What is the Difference Between Lip Flip and Lip Filler
  • What is the Difference Between Bone Spurs and Plantar Fasciitis
  • What is the Difference Between Tension Pneumothorax and Cardiac Tamponade
  • Home
  • Vacancies
  • About
  • Request Article
  • Contact Us

Copyright © 2010-2018 Difference Between. All rights reserved. Terms of Use and Privacy Policy: Legal.