Question

Principles-based standards differ from a rules-based approach because: Principles-based standards rely on bright-line concepts to apply accounting standards Rules-based standards rely on bright-line rules to apply accounting standards Principles-based standards set uniform goals for the application of accounting standards Rules-based standards form the basis of IFRS

Answer 1

Answer: Principles-based standards set uniform goals for the application of accounting standards

Explanation:

Rule based standards are quite rigid and as a result, set specific goals when it comes to the application of accounting standards. This is in contrast to Principles based standards that set more uniform or general goals that should be met.

This is why IFRS is preferred by most nations in the world as opposed to U.S. GAAP. IFRS gives principle based standards which allow leeway unlike U.S. GAAP which is rules based and gives little leeway in application.