IFRS Quiz

International Financial Reporting Standards (IFRS) are accounting standards issued by the IFRS Foundation and the International Accounting Standards Board (IASB) that provide a standardised way of describing a company's financial performance and position, making financial statements understandable and comparable across international boundaries. IFRS have replaced many national accounting standards around the world but have not replaced the separate accounting standards in the United States where U.S. GAAP is applied. The International Accounting Standards Committee (IASC) was established in June 1973, which devised and published International Accounting Standards (IAS), interpretations, and a conceptual framework. In 2001, the IASB replaced the IASC to bring about convergence between national accounting standards through the development of global accounting standards. IFRS Standards are required in 167 jurisdictions and permitted in many parts of the world, including Afghanistan, South Korea, Brazil, the European Union, India, Hong Kong, Australia, Malaysia, Pakistan, GCC countries, Russia, Chile, Philippines, Kenya, South Africa, Singapore, Israel, and Turkey. US Generally Accepted Accounting Principles, commonly called US GAAP, remains separate from IFRS. The Conceptual Framework serves as a tool for the IASB to develop standards. The primary purpose of financial information is to be useful to existing and potential investors, lenders, and other creditors when making decisions about the financing of the entity. The fundamental qualitative characteristics of financial information are relevance, faithful representation, comparability, and understandability. The elements of financial statements include assets, liabilities, equity, income, expenses, gains, and losses, which are recognized in the financial statements when it is probable that the future economic benefits will flow to or from the entity. Capital maintenance describes the concepts of physical capital maintenance and financial capital maintenance. IFRS financial statements consist of a statement of financial position, a statement of comprehensive income, a statement of changes in equity, and a statement of cash flows. The adoption of IFRS in the European Union is a special case because it is an element of wider reforms aiming to consolidate the economies of member countries.