Conceptual Framework, Standards, Standard Setting, and Presentation of Financial Statements
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CPA Auditing and Attestation (AUD) › Conceptual Framework, Standards, Standard Setting, and Presentation of Financial Statements
Which of the following could be considered as enhancing qualitative characteristics of financial reporting?
Comparability
Verifiability
Timeliness
Understandability
All of these
Explanation
Enhancing qualitative characteristics are the attributes that make financial information useful. Qualitative attributes are the non-numerical characteristics that distinguish more useful information from less useful information. All of the following characteristics are considered to be enhancing qualitative characteristics: comparability (i.e. consistency), verifiability, timeliness, and understandability.
Which of the following is not an accurate difference between the International Financial Reporting Standards (IFRS) and the Generally Accepted Accounting Principles (US GAAP)?
The US GAAP uses a principles based approach while the IFRS employs a rules based approach.
The US GAAP uses a two-step impairment approach while the IFRS uses a one-step approach.
The US GAAP has no requirement regarding comparative information while the IFRS does.
The IFRS permits the reevaluation of intangible assets other than goodwill while the US GAAP does not.
None of these
Explanation
"The US GAAP uses a principles based approach while the IFRS employs a rules based approach" is the correct answer. This is not an accurate difference between the IFRS and the USGAAP. The US GAAP typically employs a rules based approach while the IFRS follows a principles based approach. The other choices represent accurate differences between the IFRS and US GAAP according to the International Accounting Standards Committee.