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Rupesh Roshan Singh, Lovely Professional University Unit 3: Accounting Standards

Unit 3: Accounting Standards Notes

CONTENTS
Objectives
Introduction
3.1 Accounting Standards

3.1.1 Meaning of Accounting Standards
3.1.2 Need and Formulation of Accounting Standards
3.1.3 Nature
3.2 Accounting Standards in India

3.3 Summary
3.4 Keywords
3.5 Review Questions
3.6 Further Readings

Objectives

After studying this unit, you will be able to:

 Define the meaning and need of accounting standards
 Describe the Accounting policies
 Know the Accounting standards-1

Introduction

For the interest of customers, investors, owners, it is necessary that financial statement of a
company should be transparent, properly disclosed, consistent and reliable. For this purpose
accounting standards are framed by ICAI in India.

3.1 Accounting Standards

There are many users of financial statements as investors, creditors, government, consumers,
owners, etc. They take many economic decisions on the basis of financial statements. If the
financial statements are not properly regulated, there is possibility that the financial statements
may mislead and provide the distorted picture of the business in the place of true and fair picture
of the business. Proper regulation of the process of accounting it is essential so that these
statements should be transparent, properly disclosed, consistent and reliable. Adequate disclosure
in the accounts is also required. For this purpose, accounting standards are prepared at the
national and international level. Actually the generally accepted accounting principles are
codified by the accounting standards. Accounting standards prepares the norms and guidelines
to prepare the financial statements and annual reports. At the international level the International
Accounting Standard Committee (IASC) has issued the International Standards. In this committee,
there are leading professional bodies of UK, USA, Australia, France and Canada. India is also a
member of this committee. India has also prepared its own accounting standards, which are
prepared by the Institute of Chartered Accountant of India (ICAI).

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