Accounting Standards

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:

  1. Corporate Entities
  2. Non-Corporate Entities.

Under Corporate Entities, there are two levels where the accounting standards are used, and they are as follows:

  1. SMCs which stands for Small and Medium Companies.
  2. Non-SMCs.

Under Non-Corporate Entities, there are three levels which are clearly:

  1. Level 1
  2. Level 2
  3. 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:

  1. 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:

  1. FRS 1 First-time adoption of International Financial Reporting Standards
  2. IFRS 2 Share-based payment
  3. IFRS 3 Business combinations
  4. IFRS 4 Insurance contracts
  5. IFRS 5 Non-current assets held for sale and discontinued operations
  6. IFRS 6 Exploration for and evaluation of mineral resources
  7. IFRS 7 Financial instruments: disclosures
  8. IFRS 8 Operating segments
  9. IFRS 9 Financial instruments
  10. IFRS 10 Consolidated financial statements
  11. IFRS 11 Joint arrangements
  12. IFRS 12 Disclosure of interests in other entities
  13. IFRS 13 Fair value measurement
  14. IFRS 14 Regulatory deferral accounts
  15. IFRS 15 Revenues from contracts with customers
  16. IFRS 16 Leases

The International Accounting Standard has released 29 accounting standards which are as follows:

  1. IAS 1 Presentation of financial statements
  2. IAS 2 Inventories
  3. IAS 7 Statement of cash flows
  4. IAS 8 Accounting policies, changes in accounting estimates and errors
  5. IAS 10 Events after the reporting period
  6. IAS 11 Construction contracts
  7. IAS 12 Income taxes
  8. IAS 16 Property, plant and equipment
  9. IAS 17 Leases
  10. IAS 18 Revenue
  11. IAS 19 Employee benefits
  12. IAS 20 Accounting for government grants and disclosure of government assistance
  13. IAS 21 The effects of changes in foreign exchange rates
  14. IAS 23 Borrowing costs
  15. IAS 24 Related party disclosures
  16. IAS 26 Accounting and reporting by retirement benefit plans
  17. IAS 27 Consolidated and separate financial statements
  18. IAS 28 Investments in associates and joint ventures
  19. IAS 29 Financial reporting in hyperinflationary economies
  20. IAS 31 Interest in joint ventures
  21. IAS 32 Financial instruments: presentation
  22. IAS 33 Earnings per share
  23. IAS 34 Interim financial reporting
  24. IAS 36 Impairment of assets
  25. IAS 37 Provisions, contingent liabilities, and contingent assets
  26. IAS 38 Intangible assets
  27. IAS 39 Financial instruments: recognition and measurement
  28. IAS 40 Investment property
  29. 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. 

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About the Author

Rachit believes in the power of education and has studied from the top institutes of IIIT Allahabad, IIM Calcutta, and Francois Rabelias in France. He has worked as Software Developer with Microsoft and Adobe. Post his MBA, he worked with the world’s # 1 consulting firm, The Boston Consulting Group across multiple geographies US, South-East Asia and Europe.

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