In a principles-based standard-setting system (such as Canadian GAAP), compared to a rules-based approach (such as U.S.GAAP),
A)since it is more prescriptive, it may be easier to defend how to account for a particular item.
B)there is a rule for every situation.
C)accountants either apply specific standards based on the conceptual framework, or, professional judgement consistent with the framework.
D)it is expected that professional accountants might encounter situations where they are unable to apply the principles appropriately.

Question

Quizplus · Accepted Answer

In a principles-based standard-setting system, accountants either apply specific standards based on the conceptual framework or professional judgement consistent with the framework. This allows for more flexibility in accounting treatments and encourages professional judgement based on underlying principles rather than strict adherence to rules.

In a Principles-Based Standard-Setting System (Such as Canadian GAAP), Compared