Accounting Theory

Running head: ACCOUNTING THEORY
Accounting Theory
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ACCOUNTING THEORY1
Table of Contents
In response to Question 1...........................................................................................................2
In response to Question 2...........................................................................................................2
In response to Question 3...........................................................................................................3
In response to Question 4...........................................................................................................4

ACCOUNTING THEORY2
In response to Question 1
Accounting Standards are referred to as the set of norms, procedures and techniques
which further defines the accounting practices and policies. In every business, accounting
standards plays a significant role and it should be set based on the financial objectives of the
firm. Accounting standards in the business further improves the transparency in the financial
statement of the country. Generally accepted accounting principle is the principle which is
applied by many business and is considered as the widely accepted for the purpose of
preparing the financial statements (Ji 2017).
Accounting standards should be set in order to eliminate any kind of fraudulent
activities within the system. Setting the accounting standards will enhance the overall
business prospect and the financial aspects of the firm will further improve by following the
set of standards. Following the standards are significant in order to minimize the risks
associated and the chances of errors in the business of the company (Macuda, Matuszak and
Różańska 2015).
In response to Question 2
The International Accounting Standards Board or (IASB) is referred to as the private
sector body considered as independent which develops and approved by the International
Financial Reporting Standard (IFRSs). The approach is currently taken by the IASB due to
the roles which are adopted by the IFRS foundation which includes the full option in
developing the technical agenda which is accustomed as per the requirement of the public and
trustees, the preparation of the drafts included in the IFRS are further specified in the
constitution. Further the issuing and approval of interpretation is developed by the Committee
of the IFRS.