About Accounting Standards

Meaning of Accounting Standard:

The accounting standards are set of guidelines i.e. Generally Accepted Accounting Principles, that are followed for preparation and presentation of financial statements. They are accounting rules and procedures relating to measurement, recognition, treatment, presentation and disclosures of accounting transactions in the financial statements issued by the council of the institute of chartered Accountant of India.


 1. Main objective of accounting standards are harmonizing accounting policies and practice followed by different enterprises so that comparison of different enterprises can be done easily.

2. It reduce accounting alternative for preparing financial statement to maintain harmonization.

3. promote better understanding of financial statements.

4. enhances reliability of financial statements.

5. understand significant accounting policies adopted and applied.

Benefits:- There are following benefits

-It reduces variation between different enterprises for accounting treatment used to prepare financial statement.

-Standards discloses all information even which are not required by law.

-It helps in comparison of financial statement of companies situated in different parts of countries or world.


-When there are alternative of many accounting treatment, choice of best alternative generally become difficult.

-Standards are rigid not flexible for applying accounting treatment.

-Standards can not override statute. It has to follow requirement of statute.

 Overview of Accounting Standard in India

-ICAI constitute Accounting Standard Board ( ASB ) on 21st April 1977.

-Main Function of ASB to formulate Accounting Standards.

-ASB issued so far 32 Accounting Standard but AS-8 (Accounting for Research and development ) and AS-6(depreciation)  have been withdrawn so there are 30 Accounting Standards.

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