Q2IFRS - Intermediate Accounting (Kieso)

Question

Question: What might explain the fact that different accounting standard-setters have developed accounting standards that are sometimes quite different in nature?

Step-by-Step Solution

Answer

 

Answer

The standards presented by the concern are sometimes tax-oriented, rules and principles-based as well as business-oriented. It means that they usually vary in objectives and concepts.

Step 1: Definition of Accounting Standards

An accounting standard refers to a document issued by a regulatory body, indicating the way in which the accounting transactions are listed and reported. The concern that usually presents accounting standards is the International Accounting Standards Board (IASB) as well as the Financial Accounting Standards Board (FASB). 

Step 2: Fact that explains that accounting standards are sometimes quite different in nature.

Different accounting standard-setters have developed accounting standards that vary in nature. Accounting standards are formulated to ensure that there is conformity in financial reporting and regularity in the data that is issued by the firm. However, the way of presentation of financial statements is mostly dependent on the country’s local and statutory requirements. In some countries, accounting standards have been set basically in accordance with the needs of the private creditors, while in other countries the tax authorities or central planners have been implemented by International Financial Reporting Standards (IFRS).