Revenue Recognition: IFRS vs GAAP

Very Easy Financial Reporting Standards Comparison Of Ifrs And Gaap

In the context of financial reporting, different frameworks such as IFRS (International Financial Reporting Standards) and GAAP (Generally Accepted Accounting Principles) are used across the globe. These frameworks dictate how financial transactions are recorded and reported.

One major aspect of these standards is how they handle the recognition of revenue. Which of the following statements accurately reflects a difference between IFRS and GAAP regarding revenue recognition?

Both IFRS and GAAP recognize revenue when it is earned and realizable.

IFRS follows a principles-based approach while GAAP follows a rules-based approach.

IFRS allows for more discretion in determining the timing of revenue recognition compared to GAAP.

Hint

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