Table Of Contents
What Are According Standards And Need / Purpose / Objectives Of Accounting Standards
What Are accounting standards ( ASs ) ?
: Written policy documents issued by the expert accounting body or by the Govt. or by the other regulatory body, which covers the different aspects in preparation of financial statements.
Who Formulate Accounting Standards In India ?
: In India the institute of chartered accountants of India ( ICA ) has set and independent Accounting Standard Board ( ASB ) In 1977, which formulates The accounting standards.
What is the Need / Purpose / Objectives Of Accounting Standards ?
: Following are the main purposes / Objectives / needs of accounting standards –
- Improving quality of financial reporting I.e. quality of preparation of financial statements like P & L A/c, and balance sheet.
- Making such financial statements more comparable.
- Encouraging the accountants to maintain consistency in using accounting policies.
In simple words the accounting standards aim at improving the quality of reporting by promoting comparability, consistency and trasparency.
Good financial reporting based on accounting standards, creates a faith among different users of final trial standards. The shareholders, debentureholders, banks, insurance companies, investors can have a trust on the financial statements which are prepared on the basis set accounting standards.