Questions for Consideration (7-8) Assignment Example | Topics and Well Written Essays - 250 words

Questions for Consideration (7-8) - Assignment practice sessionSince there is a similarity in the business line operations irrespective of whether it is a small business or a large organization, then there should be no derivative report. Furthermore, the introduction of differential account would lead to the formation of new accounting standard boards that would come up with the rules and regulations. This would require educating the auditors, monetary analysts and accountants all over again. This would live organizations a great deal of cash. Furthermore, there would be inconsistencies in financial records in case of dealings between the small companies and the large corporations. It would also non be cost effective for a private company that wants to go public since they would require changing a altogether accounting system.In my opinion, the principles-based approach of coming up with accounting standards is better as compared to the rules-based approach. This is because the approach is not new to the U.S standard settings. Moreover, the approach has been in use for over 20 years thus financial departments of organizations are conversant with its framework. In addition, the principle-based order is detailed and precise for use. The approach also allows the developing of accounting from the conceptual framework ensuring a broad application and avoiding exceptions (Alexander and Britton 219).If the principle-based approach is universally adopted, there are several(prenominal) potential problems that may be experienced in the future. The increasingly detailed rules in the approach of the method would lead to accountants concentrating more on the required form rather than the substance of transactions. Furthermore, the required complex expound of the method may lead to accountants structuring their businesss reports around the rules. This would lead to undesired accounting results (Alexander and Britton