International Financial Reporting Standards $($IFRS$)$ and Generally Accepted Accounting Principles $($GAAP$)$ are two sets of accounting standards used worldwide.

Here's a brief comparison:

Scope:

IFRS: Developed by the International Accounting Standards Board $($IASB$),$ IFRS is used in over $120$ countries, including the European Union, Australia, and many Asian countries.

GAAP: Generally Accepted Accounting Principles are specific to the United States and are set by the Financial Accounting Standards Board $($FASB$).$

Principles vs$.$ Rules:

IFRS: Emphasizes principles$-$based standards, which provide guidelines and principles for preparing financial statements. This allows for more flexibility and judgment in financial reporting.

GAAP: Often considered more rules$-$based, with specific guidelines and rules for various transactions and events.

Hierarchy of Principles:

IFRS: No strict hierarchy of principles. IFRS provides principles and guidelines, allowing for interpretation based on specific circumstances.

GAAP: Follows a strict hierarchy of accounting principles, with specific rules for different situations.

Reporting of Financial Instruments:

IFRS: Allows for more flexibility in the classification and measurement of financial instruments.

GAAP: Has more detailed rules for the classification and measurement of financial instruments.

Treatment of Inventory:

IFRS: Permits the use of the Last In$,$ First Out $($LIFO$)$ method for inventory valuation, although it's less common.

GAAP: Allows for the use of LIFO, but it's widely used and accepted.

Now, here's an objective type question based on the information provided:

Which accounting standard allows for more flexibility in financial reporting?

a$)$ IFRS

b$)$ GAAP

c$)$ Both IFRS and GAAP

d$)$ None of the above