Standard accounting principles are those unique set of high quality, understandable, enforceable and globally accepted accounting rules which can follow by all organization of different countries. When we study accounting principles of different countries, we find many differences in these. For example Chinese accounting principles are different from USA accounting principles because china industry was based on sole owner. USA industry is based on corporations. But now, china is also moving to corporation.
As per Chinaorbit
So, for comparing accounting reports of two or more companies of two or more countries, it is very necessary to follow standard accounting principles.
IFRS foundation is working in this area. It has made international financial reporting standards which are usable in more than 113 countries from 27 Aug. 2008.
Benefits of Standard Accounting Principles
1. If all organizations use same standard accounting principles, it is very benefited for investors who study the financial reports of different business organization before investing their money. They can easily compare without any problem.
2. Companies can work at international level without any accounting problems.
3. The industry would be able to raise capital from foreign markets at lower cost if it can create confidence in the minds of foreign investors that their financial statements comply with globally accepted accounting standards.
As per Chinaorbit
Chinese Accounting Standards (CAS) were largely replaced by the International Financial Reporting Standards (IFRS), to bring China more in line with the rest of the world.
Modern accounting needs to be able to analyse the financial health of a company in order to correctly allocate funds and other resources to its various departments. The Chinese system on the other hand, was, initially, simply a compilation of the assets owned by a particular company, with no measure of profit and loss. Moreover, there was no recording of the debts of a company, giving managers an extremely difficult task of running a profitable firm, as they were unable to determine from where the firm is losing money.
So, for comparing accounting reports of two or more companies of two or more countries, it is very necessary to follow standard accounting principles.
IFRS foundation is working in this area. It has made international financial reporting standards which are usable in more than 113 countries from 27 Aug. 2008.
Benefits of Standard Accounting Principles
1. If all organizations use same standard accounting principles, it is very benefited for investors who study the financial reports of different business organization before investing their money. They can easily compare without any problem.
2. Companies can work at international level without any accounting problems.
3. The industry would be able to raise capital from foreign markets at lower cost if it can create confidence in the minds of foreign investors that their financial statements comply with globally accepted accounting standards.
Comments