World Library  
Flag as Inappropriate
Email this Article

Standard accounting practice

Article Id: WHEBN0000182774
Reproduction Date:

Title: Standard accounting practice  
Author: World Heritage Encyclopedia
Language: English
Subject: Tone at the top, Creative accounting, Financial ratio, Activision, Accounting
Publisher: World Heritage Encyclopedia

Standard accounting practice

Standard accounting practices require publicly traded companies to follow certain accounting rules when presenting financial statements so that the readers of the statements can easily compare different companies. Private companies are also often required by banks and shareholders, for example, to present information according to their specified rules.

Usually, countries practicing civil law system write standards into law and countries with English common law systems have private organizations to set the rules. There are specialist organizations that can arrange for the set-up of an accounting practice with a franchise business model which can prove successful from the out-set.

Common accounting standards

Some commonly used accounting standards include:

Rationale for uniform practices

The lack of transparent accounting standards in some nations has been cited as increasing the difficulty of doing business in them. In particular, the Asian financial meltdown in the late 1990s has been partially attributed due to the lack of detailed accounting standards. Giant firms in some Asian countries were able to take advantage of their poorly devised accounting standards to cover up immense debts and losses, which yielded a collective effect that eventually led the whole region into financial crisis.


The accounting scandals of the early 21st century, which affected companies such as Worldcom and Enron, have shown the limitations of accounting standards in the United States.

Further reading

  • Meeks, Geoff, and GM Peter Swann. "Accounting standards and the economics of standards." Accounting and Business Research 39.3 (2009): 191-210.
This article was sourced from Creative Commons Attribution-ShareAlike License; additional terms may apply. World Heritage Encyclopedia content is assembled from numerous content providers, Open Access Publishing, and in compliance with The Fair Access to Science and Technology Research Act (FASTR), Wikimedia Foundation, Inc., Public Library of Science, The Encyclopedia of Life, Open Book Publishers (OBP), PubMed, U.S. National Library of Medicine, National Center for Biotechnology Information, U.S. National Library of Medicine, National Institutes of Health (NIH), U.S. Department of Health & Human Services, and, which sources content from all federal, state, local, tribal, and territorial government publication portals (.gov, .mil, .edu). Funding for and content contributors is made possible from the U.S. Congress, E-Government Act of 2002.
Crowd sourced content that is contributed to World Heritage Encyclopedia is peer reviewed and edited by our editorial staff to ensure quality scholarly research articles.
By using this site, you agree to the Terms of Use and Privacy Policy. World Heritage Encyclopedia™ is a registered trademark of the World Public Library Association, a non-profit organization.

Copyright © World Library Foundation. All rights reserved. eBooks from Project Gutenberg are sponsored by the World Library Foundation,
a 501c(4) Member's Support Non-Profit Organization, and is NOT affiliated with any governmental agency or department.