Accounting Standards – Meaning, Objectives and Advantages

Accounting Standards (AS) Meaning

Accounting standards can simply be understood as the written statements comprising a whole series of rules and directions that are generally formulated and issued by the accounting institutions. These particular standards are formulated by the accounting institutions to execute uniform and invariable financial statements. It also tends to formulate other exposures and components that impact the different and also for other disclosures affecting the various users of accounting information.

These accounting standards have a propensity to establish the terms and conditions of different accounting strategies, policies, and practices through effective  execution of certain guidelines and rules with an aim to achieve smooth financial statements interpretation. These statements are released time to time in order to establish flawless execution of accounting tasks. There are certain accounting institutions in different countries namely Financial Accounting Standards Board (USA), Accounting Standards Board (India), Accounting Standards Committee (Canada), and the Accounting Standards Board (UK).

Accounting Standards generally contend with these four significant cases of accounting, such as

• Acknowledgment of financial events
• Assessment of financial records
• Fair proposal of financial statements
• Declaration prerequisite of companies to certify stakeholders are not misled

Objectives of Accounting Standards

In past days, the process of accounting was executed only to record and maintain financial transactions of a business or organization. However, the major prominence now shifted to affording the relevant information in the process of decision making.

ALSO READ:  Get the Best Research Paper by Academic Experts

To put forth constancy in accounting methods

Uniformity is essential when we talk about accounting standards and hence they tend to put forth the required constancy in the accounting methods.

To enhance financial statements certainty

Accounting is known to be the language of business. There are various handlers of the data and information catered by accountants who tend to take numerous decisions related to financial statements. It is essential for the financial statements to depict a clear picture of an organization. Accounting standards give a sense of faith.

To facilitate the accounting information

Accounting standards hinder certain users and handlers from reaching any fallacious endings and make the financial data clear and uncomplicated for each and every one.

To obstruct the frauds

Accounting standards have a propensity to hinder the manipulation of data and information by the management and other specific handlers. Such deceits and frauds can be stopped by executing the process of codifying the accounting methods.

To support the auditors

Accounting standards pull off certain guidelines, terms, and statement of work for accounting practices and policies. These terms and conditions turn out to be the fundamentals of auditing and thus it ultimately helps the auditors.

To grow parallelism and comparability

Comparability is considered to be one of the major objectives of accounting standards. As almost all the entities and bodies of a particular country have and follow a particular set of rules and guidelines for their financial accounts, it becomes easy to measure and compare the financial performance.

Boons of Accounting Standards

Enhances the authenticity of financial statements

Most of the investors and stockholders of an organization depend upon the financial statements to seek accurate information. They rely on the same to extract data and take financial decisions. It is quite important to ensure the authenticity and credibility of such information. This credibility and reliability are assured by accounting standards.

Assures managerial responsibility

Accounting standards administer in determining particular corporate accountability as well as the company’s regulation. This assists in assessing the performance as well. It tends to draw the most relevant components and factors that enhance the management’s achievement and
performance.

Plays the coordinator role

Accounting standards are considered to be unbiased and neutral. They tend to bring in the consistency and harmony as well. They take off the impact of different ccounting exerts and practices. In many cases, it has been observed that accounting standards formulate accurate solutions to particular issues in accounting. Accounting standard plays the role of harmonizer or coordinator when it comes to resolving accounting issues and catering the effective solution for the same.

Conclusion
Accounting Standards are considered to be the ruling authority in the aura and field of accounting. It assures to authenticate the financial information provided to the investors. Accounting standards ten to eliminate any misleading of the information as well.