Question

Which of the following statements is false?

(a) IFRS specifically requires use of a multiple-step income statement.
(b) Under IFRS, companies can use either a perpetual or periodic system.
(c) The proposed new format for financial statements was heavily influenced by the suggestions of financial statement analysts.
(d) The new income statement format will try to de-emphasize the focus on the "net income" line item.

Answer 1

The false statement is that IFRS specifically requires use of a multiple-step income statement. IFRS allows a single-step or multiple-step format while the other statements regarding inventory systems, influence of financial analysts, and the emphasis on "net income" are true. The correct option is a

Step-by-step explanation:

The subject of this question centers around the rules and guidelines of financial reporting, specifically the International Financial Reporting Standards (IFRS). Out of the statements provided, the false one is: (a) IFRS specifically requires use of a multiple-step income statement.

This is false because IFRS does not mandate the use of a multiple-step income statement; companies can present income statements in either a single-step or multiple-step format.

The correct statements are that IFRS allows companies to use either a perpetual or periodic inventory system and that the proposed new format for financial statements has been influenced by the input of financial analysts.

Lastly, the aim of the new income statement format is to present financial information in a way that may alter the emphasis traditionally placed on the "net income" line item, but the intent is not necessarily to de-emphasize its importance.