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ACCA Applied Knowledge · Financial Accounting · The regulatory framework

Which statement about convergence between IFRS Accounting Standards and US GAAP is correct?

Convergence aims to reduce differences between IFRS Accounting Standards and US GAAP so that financial statements prepared in different jurisdictions are more comparable for investors. It does not mean US GAAP has been replaced, and it concerns financial reporting rather than tax computations.

  1. AThe aim of convergence is to reduce differences between the two sets of standards so financial statements are more comparable across bordersCorrect
  2. BConvergence means US GAAP has been withdrawn and replaced entirely by IFRS
  3. CConvergence requires all entities worldwide to prepare identical tax computations
  4. DConvergence applies only to the format of the statement of cash flows

Explanation

Convergence is the process of reducing differences between IFRS and US GAAP to improve comparability for investors across borders. It has not led to US GAAP being withdrawn, and it is about financial reporting, not tax.

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