Why are there rules in accounting?

Question

Why are there rules in accounting?

In: 3

Answer 1

There are actually two types of accounting: Management Accounting and Public Accounting. The latter is what most people think of when they think of accounting and indeed it’s jam-packed with rules. It’s called “Public” accounting because it has to adhere to standards of all Public companies.

But then there is Management Accounting which is how companies manage their internal operations, and this is wide open: Companies can do pretty much as they please.