Financial Accounting
15th Edition
ISBN: 9781337272124
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Question
Chapter B, Problem 5DQ
To determine
Examine the differences between (A) rules-based approach, and (B) principles-based approach, in setting the accounting standards.
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Briefly discuss the difference between (A) a “rules-based" approach to accounting standard
setting and (B) a “principles- based" approach to accounting standard setting.
What is the difference between a conceptual framework and accounting standards ?
Which is the first step within the hierarchy of guidance when selecting accounting policies?
a. Apply a standard from PFRS (IFRS) if it specifically relates to the transaction
b. Apply the requirements in PFRS (IFRS) dealing with similar and related issue
c. Consider the applicability of the definitions, recognition criteria and measurement concepts in the Conceptual Framework
d. Consider the most recent pronouncements of other standard setting bodies
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Similar questions
- What can be interpreted from Accounting Standards Codification (ASC), of FASB?arrow_forwardCompare and contrast the Rules Based as opposed to the Principles Based Approachto developing accounting standards.arrow_forwardWhich of the following is a fundamental quality of useful accounting information? Select one: Comparability Consistency Relevance Materialityarrow_forward
- Discuss about the accounting policies, selection, relevance, reliability, faithful representation aspects in detail.arrow_forwardDescribe rules-based accounting standards.arrow_forwardDiscuss Practical Implementations of any one generally accepted accounting Principle (GAAP), discussion may be elaborated with example.arrow_forward
- Between Principles- Based and Rules-Based Accounting Standards, which would you use and do you think that this is the right way to create accounting standards?arrow_forwardWhich of the following is the first step within hierarchy of guidance to which management refers, and whose applicability at considers, when selecting accounting policies? A. Apply the requirements in PFRS dealing with similar and related issues B. Apply a standard from PFRS if it specifically relates to the transaction, event, or condition C. Consider the applicability of the definitions, recognition criteria, and measurement concepts in the Conceptual Framework D. Consider the most recent pronouncements of other standard-setting bodies to the extent they do not conflict with PFRS or the Conceptual Framework?arrow_forward1. Explain any three fundamental reasons that accounting bodies should keep in mind when developing standards.arrow_forward
- What does the conceptual framework intend to establish? a. the objectives and cocepts foruse in developing IFRSs b. the hierarchy of sources of accounting standards and principles c. the true concept of "present fairly in accordance with IFRSs' d. IFRSarrow_forwardOutline the technical benefits of a conceptual framework. What problems could occur if accounting standards were set without a conceptual framework?arrow_forwardWhich of the following are considered secondary characteristics of accounting information? a. verifiability and feedback value b. predictive value and timeliness c. comparability and consistency d. representational faithfulness and neutralityarrow_forward
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