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Simple English definitions for legal terms
International Financial Reporting Standards
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A quick definition of International Financial Reporting Standards:
International Financial Reporting Standards (IFRS) are a set of rules that companies use to prepare and present their financial statements. These rules are made by a group called the International Accounting Standards Board (IASB). The goal of IFRS is to make sure that all companies around the world use the same accounting rules, so that their financial statements are easy to compare and understand. While many countries use IFRS, companies in the United States use a different set of rules called Generally Accepted Accounting Principles (GAAP).
A more thorough explanation:
Definition: International Financial Reporting Standards (IFRS) are a set of accounting rules that dictate how financial statements should be prepared, presented, and reported. The International Accounting Standards Board (IASB) is responsible for developing and issuing the IFRS. The purpose of IFRS is to ensure that all businesses around the world follow the same accounting rules, making financial statements consistent, reliable, and comparable.
For example, if a company in the United States and a company in Japan both use IFRS, their financial statements will be prepared using the same rules. This makes it easier for investors and other stakeholders to compare the financial performance of the two companies.
It's important to note that while many countries use IFRS, the United States uses Generally Accepted Accounting Principles (GAAP) instead.
Overall, IFRS helps to promote transparency and consistency in financial reporting, which is essential for maintaining trust in the global financial system.
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