The Financial Accounting Standards Board recently introduced a proposal for a "principles-based" (as opposed to "rules-based") approach to U.S. standard setting. The proposal is available on the FASB’s website.
Analysis:
In responding the questions below, be sure to consult a wide variety of sources. Individual opinions on the subject are quite emphatic and diverse. Relying on only a few sources will likely result in highly skewed answers.
1. What is principles-based accounting? What are its chief attractions?
2. What is rules-based accounting? What are its chief attractions?
3. Which approach do you favor? Why? Defend your position carefully.
Here is the solution to this case.