Explain how “rule-based” accounting standards differ from “principle-based” standards. How might fundamentally changing accounting standards from “bright-line” rules to principle-based standards help prevent another Enron-like fiasco in the future? Some argue that the trend toward adoption of international accounting standards represents a move toward more “principle- based” standards. Are there dangers in removing “bright-line” rules? What difficulties might be associated with such a change?
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