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Gopika Juneja, Lovely Professional University Unit 1: Accounting Standards

Unit 1: Accounting Standards Notes

CONTENTS
Objectives
Introduction
1.1 Meaning of Accounting Standards
1.2 Nature and Rationale of Accounting Standards
1.2.1 Accounting Standards and Companies Act
1.2.2 Accounting Standards and Income Tax Act, 1961

1.2.3 Accounting Standards and Non-commercial Organisations
1.3 Accounting Standards Setting in India
1.3.1 Accounting Standards Setting Process
1.3.2 Accounting Standards in India
1.4 Summary
1.5 Keywords
1.6 Review Questions
1.7 Further Readings

Objectives

After studying this unit, you will be able to:

Describe the meaning of accounting standards
Discuss the nature and rationale of accounting standards
Understand the process of accounting standards setting

Introduction

Financial statements summarise the end-result business activities of an enterprise during an
accounting period in monetary term. Business activities are varied. It is strenuous task to present
the facts intelligibly, in a summarised form, and yet with minimum loss of information. In
order that the methods and principles adopted by various reporting enterprises are coherent,
not misleading – and to the extent possible are uniform and comparable – standards are evolved.

Did u know? What are standards?
The term standards denote a discipline, which provides both guidelines and yardsticks for
evaluations. As guidelines, they provide uniform practices and common techniques. As
yardsticks, standards are used in comparative analysis involving more than one subject matter.

1.1 Meaning of Accounting Standards

Accounting standard is an authoritative pronouncement of code of practice of the regulatory
accountancy body to be observed and applied in the preparation and presentation of financial

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