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Account standardization, IFRS and US GAAP. - Essay Example
Author : wilbertwaters
Finance & Accounting
Pages 9 (2259 words)
Accounting refers to the systematic way of summarizing, analyzing and reporting the financial transactions. Accounting helps in clearly understanding the financial position of the organization and comparing it with other organizations within a particular financial period…
The general purpose of the financial statement is to be prepared in accordance with the international accounting standards. The need of the accounting standards emerges because auditors and financial analyst are generally confronted with problems of accounting like biasedness, misinterpretation, inaccuracy and ambiguity. To minimize these kinds of errors a set of accounting standards was developed which was universally accepted and recognized. Without these accounting standards each and every business entity had to develop their own business standards which would make it impossible to compare the financial information with other business organizations. International Financial Reporting Standards (IFRS) are accounting principles and standards formulated by the International Accounting Standard Board (IASB) which is situated in London. These established accounting standards are ideally applicable equally to all the organizations worldwide. During 1973- 2000, the international accounting standards were formulated by the predecessor organization of the IASB formerly known as International Accounting Committee (IAC) (Beke, 2011). Since April 2001, the accounting standards set by IASB are taken into consideration. ...