The objective of financial statements is to provide information to stakeholders of a company so useful decisions can be made based on this information. The financial statements which are prepared in compliance with accounting standards set out by an authentic standard setting body are considered fair and reliable. It is necessary for companies to comply with these standards under regulations in a specific country. Implementation of accounting standards not only makes financial statements more reliable but increases the efficiency of managers in preparing these statements.
Financial Accounting Standards Board – FASB formulates standards which are implemented in American organizations whereas International Accounting Standards Board – IASB sets out the standards which are implemented internationally in various countries. Although there are several differences in the standards promulgated by the two boards the underlying basic objective of both boards is the same which is the true and honest presentation of financial information in financial statements.
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