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
5. understand significant
accounting policies adopted and applied.
are following benefits
-It reduces variation
between different enterprises for accounting treatment used to prepare
-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
-When there are alternative
of many accounting treatment, choice of best alternative generally become
-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AS-6(depreciation) have been withdrawn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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