Certified Supply Chain Professional (CSCP) Practice Exam

What is the primary set of financial accounting standards used internationally?

1. Generally Accepted Accounting Principles (GAAP)

2. International Financial Reporting Standards (IFRS)

3. Financial Accounting Standards Board (FASB)

4. Statutory Accounting Principles (SAP)

The correct answer is: International Financial Reporting Standards (IFRS)

The primary set of financial accounting standards used internationally is International Financial Reporting Standards (IFRS). IFRS is designed to be a globally accepted framework for financial reporting that enhances the transparency and comparability of financial statements across different countries. It is developed and maintained by the International Accounting Standards Board (IASB). The adoption of IFRS promotes consistency in financial reporting, which is crucial for investors and stakeholders who operate in multiple jurisdictions. By providing a common accounting language, IFRS helps businesses raise capital globally and simplifies the process of financial analysis. In contrast, Generally Accepted Accounting Principles (GAAP) primarily apply to the United States and are not used internationally in the same capacity. Other options like the Financial Accounting Standards Board (FASB) and Statutory Accounting Principles (SAP) relate to specific national accounting frameworks or regulatory requirements and do not serve as a global standard like IFRS.