Principles- Vs. Rules-Based GAAP

question 77

Essay

Principles- vs. rules-based GAAP
There has been much discussion about principles-based standards versus rules-based standards. Discuss the advantages and disadvantages of a principles-based approach.

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Definitions:

Environmental Assessment

The process of evaluating the potential environmental impacts of a planned project or development before decisions are made.

Strategic Management

The process of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

Analyzing

The process of examining financial data to understand the state of a business, spot trends, or make decisions.

Sole Proprietorship

A business owned and operated by a single individual, where there is no legal distinction between the owner and the business entity.