Accounting Standards are written authoritative standards that are used in the world of accountancy and finance mainly used in making the financial reports and are the main source of accounting principles that are used in the accountancy world. These accounting standards tell us the events and transactions of how the events or situations should be recognized, termed, measured, verified, and should be presented. All these specifications made in a transaction help the accounting transactions to be disclosed.
There are a total of 27 accounting standards currently used. The main objective of these standards is that they will help in maintaining and comparing the financial statements of diverse entities that are counted in an industry.
There are two types of entities, which are as follows:
- Corporate Entities
- Non-Corporate Entities.
Under Corporate Entities, there are two levels where the accounting standards are used, and they are as follows:
- SMCs which stands for Small and Medium Companies.
Under Non-Corporate Entities, there are three levels which are clearly:
- Level 1
- Level 2
- Level 3
*With respective accounting functions.
The industrial, corporate companies are bound to follow these accounting standards while preparation of their financial statements at the end of the accounting year. There are governments acts made under which the corporate sector needs to follow the accounting standards. The given Acts are as follows:
- Section 129, Companies Act.
There is a different list of Accounting Standards which are made and updated every year by the IFRA group, which stands for International Finance Reporting Standard and by the IAS department, which stands for International Accounting Standards.
The International Finance Reporting Standard has released 16 accounting standards in 2019, which are as follows:
- FRS 1 First-time adoption of International Financial Reporting Standards
- IFRS 2 Share-based payment
- IFRS 3 Business combinations
- IFRS 4 Insurance contracts
- IFRS 5 Non-current assets held for sale and discontinued operations
- IFRS 6 Exploration for and evaluation of mineral resources
- IFRS 7 Financial instruments: disclosures
- IFRS 8 Operating segments
- IFRS 9 Financial instruments
- IFRS 10 Consolidated financial statements
- IFRS 11 Joint arrangements
- IFRS 12 Disclosure of interests in other entities
- IFRS 13 Fair value measurement
- IFRS 14 Regulatory deferral accounts
- IFRS 15 Revenues from contracts with customers
- IFRS 16 Leases
The International Accounting Standard has released 29 accounting standards which are as follows:
- IAS 1 Presentation of financial statements
- IAS 2 Inventories
- IAS 7 Statement of cash flows
- IAS 8 Accounting policies, changes in accounting estimates and errors
- IAS 10 Events after the reporting period
- IAS 11 Construction contracts
- IAS 12 Income taxes
- IAS 16 Property, plant and equipment
- IAS 17 Leases
- IAS 18 Revenue
- IAS 19 Employee benefits
- IAS 20 Accounting for government grants and disclosure of government assistance
- IAS 21 The effects of changes in foreign exchange rates
- IAS 23 Borrowing costs
- IAS 24 Related party disclosures
- IAS 26 Accounting and reporting by retirement benefit plans
- IAS 27 Consolidated and separate financial statements
- IAS 28 Investments in associates and joint ventures
- IAS 29 Financial reporting in hyperinflationary economies
- IAS 31 Interest in joint ventures
- IAS 32 Financial instruments: presentation
- IAS 33 Earnings per share
- IAS 34 Interim financial reporting
- IAS 36 Impairment of assets
- IAS 37 Provisions, contingent liabilities, and contingent assets
- IAS 38 Intangible assets
- IAS 39 Financial instruments: recognition and measurement
- IAS 40 Investment property
- IAS 41 Agriculture
Accounting standards can also be termed as the documents which need to be followed by the corporate world while forming or measuring their financial reports. It is the legal ethics that need to be followed in every industry to get an accurate measure of the financial reports and the transactions caused in any industry in a period.