Recent Accounting Scandals Have Raised Concerns Over the Quality and Transparency

question 18

Essay

Recent accounting scandals have raised concerns over the quality and transparency of financial accounting and reporting in the United States.Critics of what is termed the "rules-based" system currently used in the U.S.cite the increasingly detailed and complex nature of rule-driven accounting pronouncements.These critics suggest that the United States should adopt a principles-based system similar to that of the International Accounting Standards Board.
Explain what is meant by a principles-based system and the advantages and disadvantages of such a system.

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Definitions:

Computing Mean

The process of calculating the average value of a set of numbers by adding them together and dividing by the quantity of numbers.

ΣX / N

The formula for calculating the mean of a set of data, where ΣX is the sum of all data points and N is the number of data points.

Arithmetic Average

Another term for the mean, calculated as the sum of all values divided by the number of values.

Frequency Value

The count of how many times a specific data point or value appears within a dataset.