5. Accounting Standards

Accounting Standards

History and Development of Accounting Standards

The International Accounting Standards Committee (IASC) came into existence on 29th June 1973.

The main objectives of IASC are to develop the accounting standards. In India the Institute of

Charted Accountants of India (ICAI) had constituted the ‘Accounting Standards Board’ in April

1977 for developing the Accounting Standards

Meaning of Accounting Standards:

Accounting standards are the rules in written form that ensure the uniformity of accounting Standards, and provide guidance for the preparation, presentation and reporting of accounting information.

Features/Characteristics/Nature of Accounting Standards:

a) Provide Guidance to the Accountants ;

b) Brings Uniformity;

c) Accounting Standards are flexible ;

d) Provide information

Advantages of Accounting Standards

a) Helpful in bringing the uniformity

b) Helpful in improving the reliability of financial statements

c) Helpful in resolving the conflicts among the users of financial information.

Accounting Standards issued by the ICAI: Amendment is made recently in the section 211 of

companies act 1956. According to this amendment, the financial statements (Profit and Loss

Account and Balance Sheet) of a company should comply with the Accounting Standards. The

Council of the Institute of Charted Accountants of India has so far issued the following 32

Accounting Standards (AS).

Process of Accounting:

(1) Collecting and identifying financial transactions

(2) Recording

(3) Classifying

(4) Summarizing

(5) Deals with financial transactions

(6) Analysis and Interpretation

(7) Communicates