Which of the following statements about a rules-based versus principles-based approach to setting accounting standards is NOT true? 1. A principles-based approach provides management with the flexibility to exercise judgement 2. A rules-based approach provides a relatively more limited scope for earnings management (EM) activity to occur 3. A rules-based approach provides companies with guidance on how they should they should account for various items and situations 4. A principles-based approach allows management to use accounting policy choice as a means of communication

Which of the following statements about a rules-based versus principles-based approach to setting accounting standards is NOT true? 1. A principles-based approach provides management with the flexibility to exercise judgement 2. A rules-based approach provides a relatively more limited scope for earnings management (EM) activity to occur 3. A rules-based approach provides companies with guidance on how they should they should account for various items and situations 4. A principles-based approach allows management to use accounting policy choice as a means of communication