What Is the Fundamental Difference Between IFRS and GAAP

question 68

Multiple Choice

What is the fundamental difference between IFRS and GAAP?

• A) GAAP relies more on general principles but ignores the spirit of those principles.
• B) GAAP relies more on specific rules and the spirit of the rules.
• C) GAAP relies more on specific rules but not the spirit of the rules.
• D) GAAP relies more on general principles as well as the spirit of those rules.

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Definitions:

Return On Investment (ROI)

A measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.

Net Operating Income

This refers to the profit realized from a business's operational activities, excluding taxes and interest.

Contribution Margin Ratio

A financial metric that measures the proportion of revenue that exceeds variable costs, indicating how much earnings can contribute towards fixed costs and profit.

Combined Margin

refers to the total margin generated by a product or entity after accounting for various types of costs, merging both gross and net margins to provide an overall profitability measure.