IFRS Tends to Be More Principles-Based Compared with GAAP,which Is

question 115

Multiple Choice

IFRS tends to be more principles-based compared with GAAP,which is viewed as more rules-based.Which of the following is a true statement about a principles-based system?

• A)A principles-based system eliminates the need for internal controls.
• B)A principles-based system is significantly weaker than a rules-based system.
• C)A principles-based system will eliminate all fraud.
• D)A principles-based system is a way to calculate interest receivable or payable.
• E)A principles-based system depends heavily on control procedures to reduce the potential for fraud or misconduct.

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Definitions:

Distribution

The process of allocating assets, such as cash dividends or stock shares, to shareholders as part of the earnings generated by a company.

Final Settlement

The completion of a financial transaction where the seller delivers the agreed goods or assets and the buyer pays for them as per the terms of the contract.

Profit and Loss Basis

Profit and Loss Basis is a method of accounting that records revenues and expenses as they are earned or incurred, used to determine a company's financial performance over a period.

Liquidation Expenses

Costs associated with converting assets into cash or paying off debt during the winding up of a business.