PRINCIPLES-BASED ACCOUNTING Definition

Bookmark and Share

PRINCIPLES-BASED ACCOUNTING provides for few exact rules and little implementation guidance. Instead, general principles are put forward and companies must ensure that their financial statements fairly and accurately represent these principles. Proponents argue that this type of system does not allow for less than ethical financial engineering, where complex transactions are undertaken in order to get around following specific rules-based accounting standards. Critics believe a principles-based system allows too much leeway for companies, because they generally do not have to follow specific rules, only wide-arching principles. See also RULES-BASED ACCOUNTING.

Learn new Accounting Terms

SEPARABLE COSTS are all costs (manufacturing, marketing, distribution, etc.) incurred beyond the split-off point that are assignable to one or more individual products.

FAIL is the failure of a transaction to be completed. In the settlement of a securities transaction, a fail occurs if the instrument is not paid for or not delivered.

Suggest a Term

Enter Search Term

Enter a term, then click the entry you would like to view.