Choose the appropriate answer from the given alternatives.
1. What is the primary objective of IFRS?
a) Increase complexity in financial reporting
b) Enhance transparency, comparability, and consistency
c) Provide guidelines for national GAAP
d) Apply only to publicly traded companies
2. Which method of accounting for inventory costs is permitted under both GAAP and IFRS?
a) LIFO
b) FIFO
c) Weighted Average
d) Specific Identification
3. What is the primary focus of IFRS principles in comparison to GAAP?
a) Strict adherence to rules
b) Substance of the transaction
c) Industry-specific guidance
d) Conservative accounting practices
4. What is the primary purpose of preparing for the first-time adoption of IFRS?
a) Introduce new accounting principles
b) Align with local regulatory requirements
c) Evaluate the impact on financial statements
d) Increase disclosure requirements
5. Which IFRS principle emphasizes caution when there is uncertainty about the realization or measurement of assets or income?
a) Fair Presentation
b) Prudence
c) Going Concern
d) Substance over Form
6. What is the basis for recording transactions and events in financial statements under the accrual basis principle?
a) When the cash is received or paid
b) When they occur
c) Only at the end of the financial year
d) As per the legal form of the transaction
7. Which of the following is a key characteristic of IFRS for SMEs?
Answer (2)
The answers highlight that the main goal of IFRS is to enhance transparency and comparability in financial reporting, with a focus on the substance of transactions. Key points include the permitted accounting methods, the importance of prudence, and the evaluation of financial statement impacts when adopting IFRS for the first time. IFRS prioritizes clarity while allowing some flexibility in reporting for small businesses.
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The answers to the IFRS questions emphasize key principles such as enhancing transparency, allowing specific inventory methods, and focusing on the substance of financial transactions. IFRS is designed to improve comparability globally and prioritize prudence in financial reporting. Understanding these concepts is essential for applying IFRS effectively. ;
