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

question 53

Multiple Choice

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

• A) Detailed guidance or rules encourage accountants to look for ways around 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 demonstrated to encourage the greatest economic development.

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Definitions:

General Journal

The general journal is a primary accounting record used to enter all transactions through debits and credits, serving as the initial point of data entry.

Accounts Receivable

Represents money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Accounts Payable

Liabilities of a business that are due to be paid to creditors within a short period, usually one year.

General Journal

A primary accounting record used to track all financial transactions of a business, entered in chronological order.