Rule-based accounting is basically a list of detailed rules that must be followed when preparing financial statements. Rules-based accounting such as generally accepted accounting principles (GAAP) is used as a conceptual basis for accountants. A simple set of key objectives are set out to ensure good reporting.Although some rules are unavoidable, the guidelines or rules set are not meant to be used for every situation. The fundamental advantage of principles-based accounting is that its broad guidelines can be practical for a variety of circumstances. Precise requirements can sometimes compel managers to manipulate the statements to fit what is compulsory. The problem with principles-based guidelines is that lack of guidelines can produce unreliable and inconsistent information that makes it difficult to compare one organization to another.Rule-based systems are a relatively simple model that can be adapted to any number of problems, rule-based systems are really only feasible for problems for which any and all knowledge in the problem area can be written in the form of if-then rules and for which this problem area is not large. If there are too many rules, the system can become difficult to maintain and can suffer a performance hit.