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Learning Objective $07-10$ Discuss the primary differences between U$.$S$.$ GAAP and IFRS with respect to cash and receivables.

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Accounting for cash and accounts receivable are similar under U$.$S$.$ GAAP and IFRS. Other than some differences in terminology and balance sheet classifications, the most important differences involve accounting for transfers of receivables. Both IFRS and U$.$S$.$ GAAP seek to distinguish between determining whether a sales treatment or secured borrowing treatment is appropriate, but they use different conceptual frameworks to guide that choice. U$.$S$.$ GAAP focuses on whether control of the receivables is transferred, while IFRS uses a more complex decision process that also considers whether substantially all of the risks and rewards of ownership have been transferred.

Cash and Cash Equivalents Under IFRS

Knowledge Check $01$

Which of the following statements about reporting cash account information under IFRS is true?

Multiple Choice

Cash in the balance sheet does not include cash equivalents.

Overdrafts are treated as liabilities.

Bank overdrafts may be offset against other cash accounts when certain conditions are met.