What is the accounting standard?

Accounting Standard is a compilation of the principles, rules and regulations used to carry out accounting procedures. They were established to ensure that companies, especially publicly traded, maintained ethical practices when reporting their financial statements. Ethics in accounting is very important for many reasons. If the company shows inflated income or deleted expenses or obligations, then investors and creditors cannot take wise decisions on the risks of the company.

In order to ensure that the businesses follow the accounting standard, the Council for Financial Accounting Standards (FASB) was set to determine and promote them. Accounting information should be comparable in nature, viable and timely. This means that it is easy to compare the financial statements from one time with the supervision of another and that the reported information is accurate and reliable. Accountants use different financial statements to keep records of trades to achieve these goals.

Another part of the accounting standard deals with accounting or forOut -sections who work for the company preparing financial statements. These people should not have an income directly related to the performance of their employers. For example, accountants should not accept payment based on the number of sales or income of the company. This prevents unethical behavior, such as inflating the company's income to increase its own salary.

Financial statements such as revenue and balance sheet leaves should be maintained up to date and all errors should be invented before the end of each accounting period. The accounting period varies depending on society, but can be divided into months, quarters or the whole year. Very few companies describe more than one year at a time. In addition, the year in accounting does not necessarily have to be January to December. Use the company what is called a fiscal year, which is any consecutive 52 weeks.

Businesses are also obliged to report debts and expenditureis. The company's debt ratio is equal to total obligations divided by the company's overall asset and helps investors and creditors to determine how well the company is able to repay its debts. The obligations are the claim that creditors have against the assets of the company, and assets are demands that the owner or owners of the company for cash, property, buildings or land.

6 obligations must be reported together with all assets and incomes and monthly expenses such as rent or public service. If the Company fails to report revenue or obligations to relevant officials, for example for tax purposes, it may be responsible for any indiscrimination through legal regulations, re -measures, or auction.