Principles Based Accounting
6. July 2008 by Bob Jarmak.
There is increasing political pressure on the SEC and FASB to adopt global accounting standards.
Clearly, most large US companies derive a substantial part of their income and sales outside the US, and it is a significant issue. Generally, foreign accounting standards can be described as principles based accounting as compared to the US rules based accounting.In theory, principles based accounting focuses on reporting which yields the “correct” results without specifying how these results should be obtained.Another way to view this is the “end justifies the means” although the public agencies would not use this term.
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