Question

What system of accounting for financial statements is commonly used outside the US?

a. Generally Accepted Accounting Principles (GAAP)
b. International Financial Reporting Standards (IFRS)
c. Cash Basis Accounting
d. Modified Accrual Accounting

Answer 1

The International Financial Reporting Standards (IFRS) is the system of accounting commonly used outside of the US for preparing financial statements. It provides a standardized approach to financial reporting, which contrasts with the US-specific Generally Accepted Accounting Principles (GAAP).

Step-by-step explanation:

The system of accounting most commonly used outside of the United States for financial statements is b. International Financial Reporting Standards (IFRS). Unlike the Generally Accepted Accounting Principles (GAAP) which is primarily used in the United States, IFRS is used in many other countries around the world to standardize financial reporting, allowing the financial statements of businesses around the globe to be comparable and transparent.

IFRS is set by the International Accounting Standards Board (IASB) and seeks to provide a common language for business affairs so that company accounts are understandable and comparable across international boundaries.

Options such as Cash Basis Accounting and Modified Accrual Accounting are accounting methods but are not considered comprehensive accounting frameworks for preparing financial statements like IFRS and GAAP are.