Association of Chartered Certified Accountants (ACCA) Certification Practice Test

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Which of the following best describes IFRSs?

  1. International Finance Reporting Standards

  2. International Financial Reporting Standards

  3. Internal Finance Regulation Standards

  4. International Foundations of Reporting Standards

The correct answer is: International Financial Reporting Standards

The designation of IFRS as International Financial Reporting Standards is widely recognized and used around the globe. These standards are established by the International Accounting Standards Board (IASB) and serve as a framework for financial reporting, aiming to ensure consistency and transparency in financial statements across different jurisdictions. The focus on "Financial" in the correct answer emphasizes that these standards pertain specifically to the reporting and presentation of financial information, which is essential for stakeholders such as investors, regulators, and auditors who rely on accurate financial data to make informed decisions. The incorrect options highlight alternative phrases that do not accurately represent IFRS. "International Finance Reporting Standards," for example, misuses the term "Finance" instead of the proper term "Financial." Similarly, "Internal Finance Regulation Standards" suggests a focus on internal regulatory standards, which is not the function of IFRS, as they are intended for external reporting. Lastly, "International Foundations of Reporting Standards" mislabels the purpose entirely, as IFRS are not foundational in the sense indicated by the term "foundations," but rather established standards for financial reporting.