Question

Define Accounting Standards. Explain their need.

Answer 1

Accounting standards may be defined as codified generally accel accounting principles. According to Kohler, “Accounting standard is a mode of conduct imposed on accountants by custom, law or professional body”.

Following points highlight the need of accounting standards :

(1) Accounting standards make accounting procedures universally acceptable by removing the effect of diverse accounting practices and policies.

(2) Accounting standards serve as guides for solving one or more accounting problems.

(3) Accounting standards provide the basis upon which financial statements are prepared.