Generally Accepted Accounting Principles (Gaap) And Accounting Standards
To maintain uniformity and consistency in accounting records throughout world, certain rules and principles have been developed which are generally accepted by accounting profession. These principles are called as different names such as principles, concepts, conventions, postulates, assumptions. These principles are judged on their general acceptability rather than universal acceptability. So they are popularly called Generally Accepted Accounting Principles (GAAP). GAAP refer to rules adopted for recording and reporting of business transactions.
The term standard denotes a discipline.
It provides both guidelines and yardsticks for evaluation.
Accounting standard provides uniform practices and common techniques of accounting, as guidelines.
Generally accounting standards are applicable to all corporate enterprises.
Institute of Chartered Accountant of India (ICAI) constituted Accounting Standards Board (ASB) in April, 1977 for developing accounting standards. International Accounting Standards Committee (IASC) was set up in 1973, with its headquarter in London (U.K.).
The Accounting Standards Board (ASB) is entrusted with responsibility of Formulating standards on significant accounting matters keeping in view International developments and legal requirements in India. Main function of ASB is to identify areas in which uniformity in standards is required and to develop draft standards after discussions with representatives of Government, public sector undertaking, industries and other agencies.
Till date, IASC has brought out 40 accounting standards. However, the
ICAI has so far issued 29 accounting standards.
Fig.3.3 Chapter Objectives