Meaning: An accounting standards are guidelines for financial accounting, such as how a firm prepares and presents its statements and reports. In other words, accounting standards are written statements of uniform accounting rules and guidelines, which is to be followed while preparing and presenting the financial statements.

Explanation: Accounting standards are prepared keeping in view the business environment and laws of the country. Accounting Standards are not rigid. Therefore, when business environment or laws change, the accounting standards are revised.

Concept: The rules, policies or guidelines stated by accounting standards are usually for measurement, valuation and disclosure of accounting information in the financial statements. According to Kohlar, accounting standards are a Code of Conduct imposed on accountants by custom, law and professional body.

Professional accounting bodies identify areas of accounting where alternative and diverse practices are followed. In the initial years, such accounting standards are recommendatory for entities and are made mandatory gradually after some time. Accounting Standard recommends the practice out of diverse accounting practices that are available or evaluates them in details to ascertain acceptability thereof. In case of conflict between the accounting standard and law, the law shall prevail.