Why Does the IASB Believe That a Principles-Based Approach to Standard

question 12

Multiple Choice

Why does the IASB believe that a principles-based approach to standard setting is superior to a rules-based perspective?

• A)Detailed prescriptions or rules encourage accountants to look for ways to circumvent the rules rather than trying to provide useful information.
• B)Principles-based standard setting is less costly to undertake than rules-based standard formulation.
• C)It is desirable to have all corporations in all countries using the same accounting practice.
• D)A conceptual framework for standard setting has been demonstrated to encourage the greatest economic development.

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Definitions:

Additional Risk

Extra exposure to uncertainty or potential financial loss that comes with certain investments or business activities.

Employee Level Risk

The exposure to potential adverse effects on employees' health, safety, and well-being within the workplace.

Incentive Pay

A form of compensation used to motivate employees, usually tied to their performance or accomplishments.

Personal Days

Paid time off that employees can use for personal matters, separate from vacation or sick days.