The summary, analysis and personal commentary - Essay Example

Accounting standards A that guides and regulates accounting practices is called an accounting standard. Equally, a set of accounting standards that are globally accepted as suitable to the field of accounting are known as Generally Accepted Accounting Principles (GAAP) (Yu & Wahid p. 1895). The analysis of figures and the finances to place them in the right framework are at the center of accounting. Laws exist to guarantee that accounting choices get made in a coherent and sensible way.The accounting standards get used for numerous purposes.

First, they are for comparability purposes. Paramount to the function of accounting principles is the commonness that it provides for financial record maintenance. The outcome is that it is simple to compare the financial position of related entities. Secondly, they enhance transparency. Accounting values are intended to impose transparency in businesses. This type of transparency is particularly imperative in the case of public organizations, such as states or publicly traded corporations. Rules restrict the freedom and flexibility of organizations to use smart accounting to move things around or conceal them (Yu & Wahid p. 1898).Thirdly, they serve the role of relevance.

Standards work to assist entities give the most appropriate data in the most realistic way possible. In this way, institutions guided by accounting principles will produce the type of financial information that observers are mainly interested in examining. Finally, the significance of accounting standards lies in the worth that it brings to financial records for the assorted audiences that sight and makes important decisions based on it. A nonexistence of accounting principles would make the effort of shareholders, regulators, duty payers, reporters and others more complex and more hazardous.

Standards signify that taxpayers can observe how their tariff dollars are being used up, and regulators can guarantee that rules are adhered to (Yu & Wahid p.1920). Works CitedYu & Wahid, ‘Standards and International Accounting’: American Accounting Association 2014. The Accounting Review, 89 (5) p. 1895–1930