What do you mean by accounting standards ?

Accounting standards are rules, procedures methods and systems issued By appropriate authority to
appy in the preparations and presentation of financial statements .These are established and accepted
models which aim providing excellents , andequate and unbiasie treatments of accounting transaction/
informations and reporting the same in the financial statements .To facilitate there users informing
rational and judicious decisions

Acorrding to T.P “ghosh” accounting standard are the policy documents issued by the recongised expert
accountancy body relating to various aspects of treatments of accounting transactions and events.

Importance /need of accounting standards :-

1. Harmonisations of diverse accounting policies and practices:-

Accounting standards must be developed for the development of accounting as a business

language.The central idea of accounting standard is to harmonisations the diverse accounting
policies and practices followed by business enterprise . it is needed at national and international
level .

2. Reductions of reporting freedom :-

the corporations cannot be granted absolute freedom of choice regarding what to report and how
to repot market principle . for this might cause damage to the interest of the investors and creditors.
Hence as a safety measure accounting standards are needed to reduce the reporting freedom of
corporations.

3. Productions of comparable financial informations :-

Accounting standards are need to make financial informations accross the companies
comparable comparability of financial informations generated and dislcosed by several
enterprise will become easier through the adoptions of a uniform accounting standard . the
value of information would be enhanced if information can be compared from entity to entity .
4. Recognition of the principale of equity :-
From the point of view of principale of euity , it is desired that all interested user groups are
equally treated by an entity in dissemination of accounting information . the accounting
standard are needed because they recognise the principale of equity in information
dissemination .
5. compelling need due to globalization:-
moreover , in view of the globalization and intermationalisation of business , it has become an
imperative necessity that globally acceptable treatment of accounting issues and thier reporting
methods be evolved and implemented . in other words , this has further necessitated the
formulation of accounting standards.