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Chapter 1: Q3ISTQ (page 34)

IFRS is comprised of:

(a) International Financial Reporting Standards and FASB Financial Reporting Standards.

(b) International Financial Reporting Standards, International Accounting Standards, and International Accounting Interpretations.

(c) International Accounting Standards and International Accounting Interpretations.

(d) FASB Financial Reporting Standards and International Accounting Standards.

Short Answer

Expert verified

The correct option is (b) International financial reporting standards, international accounting standards, and international accounting interpretations.

Step by step solution

01

Definition ofAccounting Standards

Accounting standards are the common principles and procedures that provide information regarding basic accounting practices. The standards promote comparability and transparency of the financial statement.

02

Explanation of correct option

Option (b) is correct because any company reporting its financial information according to the IFRS must comply with the following standards:

  1. International financial reporting standards.
  2. International accounting standards.
  3. International accounting interpretations.
03

Explanation for incorrect options

  1. Option (a) is incorrect because IFRS does not comprise FASB because it is country-specific and works only for U.S accounting standards.
  2. Option (c) is incorrect because IFRS comprises one more standard, the international financial reporting standard.
  3. Option (d) is incorrect because IFRS does not comprise standards developed by FASB because these are only for the U.S.

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Most popular questions from this chapter

Question: What might explain the fact that different accounting standard-setters have developed accounting standards that are sometimes quite different in nature?

Some accountants have politicization in the development and acceptance of generally accepted accounting principles (i.e., rule-making) is taking place. Some use the term “politicization” in a narrow sense to mean the influence by governmental agencies, particularly the securities and Exchange Commission, on the development of generally accepted accounting principles. Others use it more broadly to mean the compromise that results when the bodies responsible for developing generally accepted accounting principles are pressured by interest groups (SEC, American Accounting Association, businesses through their various organizations, Institute of Management Accountants, financial analysts, bankers, lawyers, and so on).Instructions

(a) The Committee on Accounting Procedure of the AICPA was established in the mid-to late 1930s and functioned until 1959, at which time the Accounting Principles Board came into existence. In 1973, the Financial Accounting Standards Board was formed and the APB went out of existence. Do the reasons these groups were formed, their methods of operation while in existence, and the reasons for the demise of the first two indicate an increasing politicization (as the term is used in the broad sense) of accounting standard setting? Explain your answer by indicating how the CAP, the APB, and the FASB operated or operate. Cite specific developments that tend to support your answer.

(b) What arguments can be raised to support the “politicization” of accounting rule-making?

(c) What arguments can be raised against the “politicization” of accounting rule-making?

Economic consequences of accounting standard-setting means:

(a) standard-setters must give first priority to ensuring that companies do not suffer any adverse effect as a result of a new standard.

(b) standard-setters must ensure that no new costs are incurred when a new standard is issued.

(c) the objective of financial reporting should be politically motivated to ensure acceptance by the general public.

(d) accounting standards can have detrimental impacts on the wealth levels of the providers of financial information.

What is the difference between the codification and the codification research system?

In what ways it felt that the pronouncements issued by the Financial Accounting Standards Board would carry greater weight than the opinions issued by the Accounting Principles Board?
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