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Single Set Of Accounting Standards Essay

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Below is an essay on "Single Set Of Accounting Standards" from Anti Essays, your source for research papers, essays, and term paper examples.

Accounting standards are principles that guides and standardizes accounting practices. Harvey & Keer defined accounting standards as: “A method or an approach to preparing accounts which has been chosen and established by bodies overseeing the profession”. The Generally Accepted Accounting Principles (GAAP) are a group of accounting standards that are widely accepted as appropriate to the field of accounting. Accounting standards are necessary so that financial statements are meaningful across a wide variety of businesses; if not, the accounting rules of different companies would make comparative analysis almost impossible. Standards are a source of rule and order and generate consistency. In failing to plan, we plan to fail. Lack of rule and order begets chaos and destruction. Therefore, accounting standards and regulations states how one can deal with different situations. There are several benefits that could be accrued from the development of a single set of accounting standards that could be applied to all countries. Some of the benefits are as follows:-
One of the benefits of developing a single set of accounting standards is that it enables investors to compare financial result of companies in different countries. Investors, both individual and corporate would like to compare the financial results of different companies’ internationally as well as nationally in order to make sound decision of investing.   They will benefit from enhanced comparability of financial statements; that is properly compared over time because the accounts are treated the same way and the same methods are applied. They can only compare if the accounting standards are similar. When accounting standards keep on changing that is they are flexible, investors will find it very hard to compare the results of different entities since different entities might be applying different accounting standards. This means that the foreign investors have to incur costs of becoming familiar with...

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