What is accounting standards ?

Accounting standard is a set of rule for all companies so that inverster and user of balance sheet and profit & loss account take a proper decision. Accounting standard  set a uniform in financial information of all companies so that user of financial statement can not be mislead.

According to companies Act 2013  Section 2 (2) defines  means the standards of accounting orany addendum thereto for companies or class of companies referred to in section 133 .

Example

Valuation of inventories

One company include GST in total value

another company exclude in GST in total value

One company include damaged  inventories value

another company exclude damaged inventories value

If different company  valuation of inventories in different style profit  & loss affect accordingly.