The benefits of rules based accounting accrue in the form of ease of comparability of financial information across companies and across time periods of the same company. It increases the objectivity of financial reporting, which is not there in case of principles based accounting approach. As has been pointed out by Beechy (2005), the application of principles based accounting approach may cause managers to be biased in the process of applying judgment, which may lead to the inaccurate representation of the financial information. Moreover, rules based accounting approach helps to increase the enforceability of financial standards as benchmarks are clearly specified in this case and as such, they can be referred to, during times of confusion and ambiguity.
However, the benefits of principles based accounting cannot be ruled out in which the information reported is relevant. As the scope for incorporating every transaction in the rule book is an ideal scenario, certain loopholes may be present in the accounting approach that can be taken advantage of to do unethical activities, while maintaining compliance with the rules. As such, principles based approach ensures that the matter reported is relevant and is a complete picture of the actual scenario.