Question

what are accounting standards and discuss its importance? what is the objective of accounting standards?

Answer 1

Accounting Standards (AS) are basic policy documents. these standers are using mainly for comparability.Their main aim is to ensure transparency, reliability, consistency, and comparability of the financial statements. They do so by standardizing accounting policies and principles of a nation/economy. All the companies will follow AS consistently so that will help to compare the companies with their performance.

The accounting standerds are issued by accounting body or a regulatory board or sometimes by the government directly.

objective of accounting standards

1.Improve the reliability of financial statements

all the companies are using the same accounting standers so it will increase the reliability of financial statement for users of the financial statement.and if not using AS consistently it will cause to big penality also

2.Comparability

all the companies are using the same accounting standers so it will help all the companies to compare with other company,

eg,for a particulare item all the companies are using the same treatment so it will lead to same presentation for all comapnies.

3.Frauds and account manipulation

All users will know how one item will deal in financial statement so that will help to avoid fraud and account manipulations