— Kishore V, SME and ACW at Edumarz.
-
Accounting deals with the recording, classification, and summarization of financial transactions and events, as well as the interpretation of their outcomes.
-
Its goal is to provide information about a company’s financial performance to a variety of users, including owners, managers, employees, investors, creditors, suppliers of goods and services, and tax authorities, and to assist them in making decisions.
-
All of these people are looking forward to accounting for relevant, usable, and trustworthy data.
-
The capacity to make inter-firm and inter-period comparisons are dependent on the financial statements’ information is based on consistent accounting policies, principles, and practices.
-
Such consistency is essential throughout the process of identifying, measuring, discussing, summarising, and reporting the events and transactions to be accounted for.
-
This necessitates the development of a proper accounting theoretical framework.
-
Accounting theory’s relevance cannot be overstated, as no field can evolve without a solid theoretical foundation.
-
Accounting theory is made up of ideas, concepts, rules, and guidelines that have been established over time to bring uniformity and consistency to the accounting process and to improve its utility to various users of accounting data.
-
Apart from this, the Institute of Chartered Accountants of India (ICAI), which is the country’s regulatory organisation for accounting policy standardisation, has released Accounting Standards, which are supposed to be followed uniformly to ensure uniformity in accounting processes.