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Accounting Standard

Accounting Standards are guidelines established to standardize financial statement preparation and presentation, including examples like NFRS, NAS, IFRS, IAS, and GAAP. They ensure uniformity, transparency, reliability, relevance, and comparability in financial reporting, which aids stakeholders in making informed decisions. Ultimately, these standards promote investor confidence and effective decision-making in financial markets.

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26 views1 page

Accounting Standard

Accounting Standards are guidelines established to standardize financial statement preparation and presentation, including examples like NFRS, NAS, IFRS, IAS, and GAAP. They ensure uniformity, transparency, reliability, relevance, and comparability in financial reporting, which aids stakeholders in making informed decisions. Ultimately, these standards promote investor confidence and effective decision-making in financial markets.

Uploaded by

mkhadka9849
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Accounting Standards are set of guidelines, principles, and rules established by accounting authorities

to regulate and standardize the preparation and presentation of financial statements.


Example of Accounting Standards are : NFRS, NAS , IFRS, IAS, GAAP.
These standards serve several important purposes:

1. Uniformity and Consistency: Accounting standards ensure that companies follow consistent
accounting methods and principles when recording financial transactions. This uniformity makes it
easier for users of financial statements, such as investors, creditors, and analysts, to compare the
financial performance and position of different companies.

2. Transparency: Accounting standards mandate transparency by requiring companies to disclose


relevant financial information, including their accounting policies, assumptions, and methods. This
transparency helps stakeholders gain insight into a company's financial health and decision-making
processes.

3. Reliability: Accounting standards emphasize the importance of reliable financial reporting. Companies
are required to use objective and verifiable methods and make reasonable estimates to ensure that
their financial statements accurately represent the economic reality of their transactions and events.

4. Relevance: Financial statements should be relevant to the needs of various users. Accounting
standards help ensure that financial information is presented in a meaningful and useful way, addressing
the specific needs of investors, creditors, regulators, and the public.

5. Comparability: Accounting standards promote comparability, enabling stakeholders to assess how


one company's performance and financial position compare to others in the same industry or sector.
This is particularly crucial for investment and lending decisions.

In summary, accounting standards are essential because they provide a consistent framework for
financial reporting, ensuring that financial information is relevant, reliable, and comparable. This, in
turn, promotes transparency, investor confidence, and effective decision-making in financial markets
and the business world

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