All of the following statements about the two major accounting standards is correct, except: IFRS is a principles-based accounting system. The IFRS is based on the best ideas of reporting from many different countries. U.S. GAAP is a rules-based accounting system. The IRS gives companies considerable specific guidance about when how, and what to report. True or false. Understanding the cash cycle helps to explain why net income reported on a company's income statement equals the actual cash generated by the firm's activities