Accounting Standards Meaning, and it’s needed.
Meaning Accounting Standards:
Accounting standards are the uniformity and application in recording the financial implications.
Kohler defines accounting standards as a mode of conduct imposed on accountants by custom, law or professional body.
In other words, a norm or guide accountant action while dealing various items that go to makeup the financial statement.
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Accounting standards does not merely define the item but also prescribed the method of dealing with them in the course of preparation and presentation of financial statements.
According to Mr. J.P.Gosh: Accounting standards are the policy documents issued by the recognized expert accounting body relating to various aspect of measurement, treatment and disclosure of accounting transactions and events.
Thus, accounting standards provide a framework for the preparation of the financial statements. In many countries, profession bodies have taken great interest in the preparation and implementation of accounting standards. The main objective being to improve the quality of financial statements.
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Need for Accounting Standards:
The need of an accounting standard is to ensure uniformity in the preparation and presentation of financial statements.
Accounting standards, concepts and convention form a base for accounting theory and practice.
Accounting standards serve the purpose of ensuring consistency in accounting procedures so that accounting data become more meaningful and dependable in the decision making process by the different groups of end-users of financial statements.
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Accounting standard bridge the gap between what accountants are supposed to do what they, in fact, do.
The standards curtail the freedom of accountants in using different approaches to the same accounting problem.
The main aim and objective of framing accounting standards is to make sure that financial statements are adequate and complete in disclosure, consistency year after year comparable between periods and firms are reliable.
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It is for this purpose accounting standards have been framed by national and international accounting bodies. They have acquired great importance in recent times.