Critics argue that IFRS is “principles-based,” whereas GAAP is more "rules-based." Using online research, summarize three specific examples of how these two sets of accounting standards differ in their operation.

A major difference between the IFRS and US GAAP is: US GAAP is principle-based and IFRS is rule-based US GAAP allows capitalization of successful development for all industries GAAP is more cash flow oriented US GAAP allows LIFO, US GAAP allows LIFO. The last in, first out (LIFO) inventory valuation system uses the price of the last units purchased in order to determine the cost of goods sold. The International Financial Reporting Standards (IFRS) require that companies use the first in, first out (FIFO) inventory valuation system or the weighted average system. While US GAAP accepts LIFO, FIFO or weighted average.

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