ACCOUNTING STANDARDS IN INDIA

Abstract

While preparing these financial statements, enterprises adopt different accounting policies. Some of these policies are discretionary in nature. Consequently, the financial statements prepared by one enterprises may be based on one set of policies, while other policies may be adopted by other enterprises. This result in that the financial statements are not comparable from one enterprise to another and also from one period to another. The accounting standards provide a framework and standard accounting policies so that the financial statements of different enterprises become comparable.

Accounting standards are the rules (framed by an expert committee) in relation to recognition, measurement and disclosure of financial information in preparation of financial statements. The basic objective of accounting standards is to standardize the accounting principles and policies with a view to bring a common approach in preparation of financial statements. The accounting standards also aim to provide valuation of inventories. The accounting standards help in presenting a ‘true and fair’ view of the operations and financial positions of an enterprise in its financial statement.