Relevance and Significance of Accounting Standard

We can compare relevance and significance of accounting standard with significance of glycerine in beauty products. Is it possible to make beauty products without glycerine? No, absolutely no. Same will apply in accounting. Without accounting standard, we can not make our financial statement correctly. Moreover, accounting standard can revise according to need of business, so, accounting standard are more relevant.

Generally, accounting standard guides us to treat different accounting issues more scientifically. There are lots of accounting standards are made in India and other countries for valuation of inventory, treatment of depreciation, accounting of lease business and investment accounting.

I read a very good thing of significance of accounting standard that it is just like rules of games. Without rules of games, you can not play well because someone can cheat you more easily. Same in accounting, without solid accounting standards, accounting may be the tool of big fraud in business. If you are auditor and you know all accounting standard well, you can uncover the mask of any accounting scandal in company.