Basic Accounting Concepts for Corporate Valuation
VALUATION-MINDED INVESTORS can benefit from knowing current accounting principles and standards. These two terms are used interchangeably, but they are different. A principle is a general concept that can be applied in all situations. A standard is a rule that fits a particular situation.
One of the hottest topics in accounting today is principles versus rules. Non-U.S. accounting tends to emphasize principles, whereas U.S. accounting tends to emphasize rules. Although the effort to develop a global standard seems to be headed toward principles, U.S. accounting is still focused on rules. The following materials should make this clear.
Summary of Tentative Global Accounting Decisions ...