Question

Identify whether the items below are characteristics of a​ principles-based (P) or​ rules-based (R) accounting​ system: R Provides a clear discussion of the accounting objective related to the standard P Contains detailed application guidance R Contains numerous exceptions to the types of firms and industries that are covered R Involves no bright-line tests ▼ Contains numerous bright-line tests

Answer 1

Answer is as under :
Characteristics	Principal based or Rules based accounting.
Provides a clear discussion of the accounting objective related to the standard	Principal based accounting
Contains detailed application guidance	Rules based accounting
Contains numerous exceptions to the types of firms and industries that are covered	Rules based accounting
Involves no bright-line tests	Principal based accounting
Contains numerous bright-line tests	Rules based accounting
Involves a significant amount of interpretation in application	Rules based accounting
Involves few, if any, exceptions	Principal based accounting
Provides insufficient guidance to implement the standard	Principal based accounting
Would not rely on extensive use of professional judgment	Rules based accounting
Results in inconsistence between standards	Rules based accounting
Reasons
Principal based accounting means standards that rely on theories , concept and principles of accounting and connected to theoretical framework
Rules based accounting means It contains specific procedures rather than theoretical framework