Introduction to Accounting Standards
Financial statements are made to sum up the end-result of all the business activities by an organization during a particular accounting period in monetary terms. These business activities differ from one business to other. To evaluate the financial statements of various reporting companies poses some difficulties because of the difference in the methods and principles adopted by these companies in preparing financial statements. To make these methods and principles standardized and comparable to the extent possible - standards are evolved. These are used to make all the accounting principles standards so that evaluation can be done easily.
What are Accounting Standards?
Accounting Standards are the statements of code of practice and performance of the regulatory accounting bodies that are to be observed and considered in the preparation and presentation of financial statements. In ordinary language, accounting standards are the written documents which are issued by the expert institutes or other specific regulatory bodies covering various aspects of treatment, measurement, presentation and disclosure of various accounting transactions.
Objectives of Accounting Standards
Basic objective of Accounting Standards is to eliminate differences in the treatment of numerous accounting aspects and to bring about standardization in process. They aim to complement the diverse accounting policies followed by the preparation and presentation of financial statements by diverse reporting companies so as to assist intra-firm and inter-firm comparisons.Accounting Standard Bodies in Different Countries
There exists different accounting standard body for different countries like-
Australia - Australian Accounting Standards Board
USA - General Accepted Accounting Principles (GAAP)
UK - UK Accounting Standards Board
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