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The Importance of Accounting Standards - Essay Example
Finance & Accounting
Pages 4 (1004 words)
The Importance of Accounting Standards to Financial Accounting First Last Name Name of Institution The Importance of Accounting Standards to Financial Accounting Introduction Successful business operation depends on the effective implementation of company policies…
They are the ones responsible for listing and analyzing every figure that comes in and out of the company's pocket. The main tool used by company's to determine their financial condition is the financial statement. It aims to supply important information concerning a company's financial position. Accounting practitioners have recognized the need to formulate accounting standards to be followed by every organization. They realized that it is of utmost importance not only to them but to all individuals who are engaged in business Part I Purpose and Significance of Financial Accounting Standards There are three considerations that Accounting Practitioners refer to when asked about the purpose of Accounting Standards. First is that it aids in sustaining the effectiveness of various accounting policies by getting rid of the discrepancies in financial statements. Second, it provides assistance to efficiently present credible and comparable data found in the financial statement of companies. Lastly it functions as an accounting alternative that lessens the notion of subjectivity in financial statements (Chandra, 2011). Accounting practitioners follow a set of guidelines while in the process of gathering financial information. They refer to it as Generally Accepted Accounting Principles (GAAP). ...
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