Assessment Task 1.pages ! Federa&on Business School BUACC3706: Financial Accoun&ng Assessment Task 1 - ESSAY Contribu&on to overall assessment: 10%...

What is the importance of Accounting Standards to the business world? Research, analyse and justify your perspective.
It is important that the accounting information presented by the companies is understandable to its stakeholders – investors, regulators, financial institutions etc. To make the information meaningful and understandable to all it is necessary that certain regulations and standards are followed. Accounting standards serve the purpose of this. Accounting standards help in keeping the investors, regulators and business owners on the same page.1
Accounting Standards are the compulsory regulations which needs to be followed during preparation of financial statements. They are further verified and used during the audit. They help in guiding the accountants that how a particular entry or transaction need to be recorded in case of financial statements. These standards and the principles exist to act as benchmark and improve the quality of financial statements.2 The main purpose if Accounting Standards is to ensure uniformity and consistency in Financial Reporting System.
Origin of Accounting Standards
In Unites States, the accounting standards which are acceptable are governed by – Generally Accepted Accounting Principles (GAAP). They were developed in 1930, the Great Depression time so as to avoid any kind fraudulent practices in accounting. These Standards under GAAP are developed by Financial Accounting Standard Board (FASB). Public companies in US need to abide by GAAP. There is an international standard body called International Financial Reporting Standards (IFRS), it differs from GAAP in certain treatments. 3
Objectives of Accounting Standards
Accounting Standards are designated as a business language which helps in communicating the financial effect of a company to the stakeholders. If this setup or process is not setup co
ectly, the these statements can be misleading and biased.
Issues which are addressed by Accounting Standards are as follows:
· Disclosure Requirement – there is disclosure requirement so that the public and interested parties are well aware of the financials of the company.
· The presentation and articulation of the statements in a manner which is meaningful to people.
· Accounting Standards specify the scope and extent of the transactions.
· Standardization – The statements need to be standardized so that they are comparable.
Importance of Accounting Standards
· Comparison
It is easy to compare two things which are in same format than the things which are in different format. If the data which is presented in Financial Statements follow certain standards then for the people inside and outside the company can easily compare the results to other companies or competitors.
Therefore, Accounting Standards provide comparability of financial statements. 4.
· Transparency
Transparency means creating an environment where the information is available to all the participants. Accounting Standards help in disclosing and disseminating information with openness. With the help of some standards the transparency in accounting standards is ensured.5. Standards help in ensuring that limit is imposed on the freedom and flexibility of the organizations so that they don’t use any biased accounting methods.
· Relevance
Relevance means that the information which is presented should be of use and should impact the decision making. 6.
Accounting Standards help in recording the transactions in such a manner that it is sensible and relevant. This ensures that the stakeholders of the information are not misguided or misdirected or fooled and relevant information is provided to them.
· Hearings
The importance of anything is judged by the value it adds or creates and the impact it creates. If there are no Accounting Standards, then the work of all the stakeholders – investors, lenders, banks etc. is of no use since they cannot assess whether the information they have gathered is trustworthy or not.
· Protecting...