Identify whether the items below are characteristics of a...

Identify whether the items below are characteristics of a principles- based (P) or rules- based (R) accounting system: ______ Provides a clear discussion of the accounting objective related to the standard ______ Contains detailed application guidance ______ Contains numerous exceptions to the types of firms and industries that are covered ______ Involves no bright- line tests _ _____ Contains numerous bright- line tests ______ Involves a significant amount of interpretation in application ______ Involves few, if any, exceptions ______ Provides insufficient guidance to implement the standard ______ Would not rely on extensive use of professional judgment ______ Results in inconsistencies between standards

Transcript

00:01 Once again, welcome to a new problem.

00:04 When you think about financial statements, when you think about financial statements, what comes to mind is the financial accounting.

00:20 So financial accounting standards board.

00:28 So financial accounting standards board.

00:31 And this is the f -a -s -b and these standards are principle -based so these standards are principle based so they're formulated on the basis of principles and these these principles so these principles so these principles are used.

01:05 These principles are used to regulate accounting accounting practices and methods.

01:24 So they're used to regulate accounting practices and methods and us law requires companies.

01:39 Requires companies to follow these standards.

01:46 So they require companies to follow these standards.

01:51 And the standards are followed in the case of reporting financial statements.

02:01 So when they have to report financial statements, then they fall the specifics or the specifics of these rules.

02:09 And standards.

02:14 The other form of standards is the international financial reporting standards.

02:31 So these are the standards at the international level beyond the u .s., so this is, this is the international accounting accounting standards.

02:54 So this is the international accounting standards.

02:59 The other form of standards that we used is rules based accounting.

03:08 So we also have rules based accounting.

03:10 And when it comes to rules based accounting, this is a standardized process.

03:24 So this is a standardized process of reporting.

03:31 So this is a standardized process of reporting.

03:36 And an example, an example is the generally generally accepted accounting principles.

03:55 So generally accepted accounting principles.

03:59 And we tend to call this gaap system, which is rules based in the us...

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