Understand The Difference Between Principle-based Versus Rule-based Accounting Standards
Difference Between Principle-based Versus Rule-based |
Principle-based:
Accounting standards may take the form of general principles, relying on interpretation and judgment by the financial statement preparers before they can be implemented.
Whereas:
Rule-based:
Alternatively, standards may take the form of a series of rules, limiting the flexibility and use of judgment allowed in their implementation.
A Comparison of the Principle-based versus Rule-based:
Principal-based:
Advantages :
Disadvantages:
Rule-based:
Advantages:
Disadvantages:
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