Accounting standards

Meaning of Accounting Standards

The accounting standards are the set of Guidelines that is Generally Accepted Accounting Principles that are followed by business entities for preparation and presentation of Financial Statements. In short accounting standards are the set of Principles, Procedures and Guidelines that defines the basis of Financial Accounting, Accounting standards guides an Accountant by the set of guidelines, laws and rules which is stated by Generally Accepted Accounting Principles.

So, sb mila  ke Accounting standard ek aisa set hai jisme hume guidelines, rules, principles etc milte hai aur in rules ke set ko hum Generally Accepted Accounting Principles kehte hain jo kisi bhi business entity ke financial statements banane ke kaam aate hai, ye rules isi liye banaye gaye hain taki sari enterprise ek hi Accounting standard ko follow kare, result nikalne ke liye..... jese school ke rules discipline maintain krane ke liye banaye jate hain vese hi accounting ke bhi rules and standards hote hain.

Concept of Accounting Standards

Accounting standards consists of Accounting rules and procedure for recognisation of Financial transactions, measurement in terms of money, treatment of transactions in the books of accounts, presentation of financial transaction and disclose the accounting transactions in financial statements. Accounting standards are prescribed to be followed in preparing and presenting the financial statements, so that the financial statements produced and presented


IFRS v/s GAAP

Basis	IFRS	GAAP
Acronym	International Financial Reporting Standard	Generally Accepted Accounting Principles
Meaning	International Financial Reporting Standards (IFRS) refer to an International Accounting Standards set of guidelines which states how business transactions and other activities are reported in financial statements. The International Accounting Standards Board (IASB) issues IFRS, and they shows how Accountants must report and maintain their accounts.	The Generally Accepted Accounting Principles (GAAPs) are the accounting rules that are accepted by accountants based on which transactions are recorded in the books of accounts and financial statements are prepared. These rules or guidelines adopted for recording and reporting business transactions, in order to bring uniformity and consistency in the preparation and presentation of financial statements.
Basis	Principals based	Rule based
Scope	IFRS is used in more than 110 countries around the world, including the European Union and many Asian and South American Countries	GAAP is only used in United States
Concept	Based on Fair value Concept	Based on Historical Cost Concept
Income Statement	Extraordinary items are not segregated in the Income statement under IFRS.	Under GAAP, extraordinary items are shown below the net income.
Developed by	International Accounting Standard Board (IASB)	Financial Accounting Standard Board (FASB)
Treatment of Inventory	LIFO (Last in First out) method of calculating inventory is not allowed	LIFO or FIFO (First In First Out) method method can be used for estimating inventory
Treatment of Intangible Assets	Intangible assets are only recognized if they will have a future economic benefit, or they give a money value in future.	Intangible assets recognized at their current fair market value and no future considerations took place.
Development costs	Development costs are capitalized under IFRS if certain criteria was fulfilled.	Development costs considered an expense under GAAP.