Accounting · Accounting Standards
Which statement best describes the fundamental difference between IFRS (International Financial Reporting Standards) and US GAAP (Generally Accepted Accounting Principles)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1IFRS is a 'rules-based' system, while US GAAP is a 'principles-based' system.
- 2IFRS is mandatory only in the USA, while US GAAP is mandatory in all European Union countries.
- 3IFRS permits the use of LIFO (Last-In, First-Out) for inventory valuation, while US GAAP strictly prohibits it.
- 4IFRS is a 'principles-based' framework that emphasizes professional interpretation, while US GAAP is a more 'rules-based' system with extensive detailed guidance.✓
Correct answer
IFRS is a 'principles-based' framework that emphasizes professional interpretation, while US GAAP is a more 'rules-based' system with extensive detailed guidance.
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