DK Goel Solutions Class 11 Accountancy Chapter 5 Accounting Standards and International Financial Reporting Standards

Short Questions

Question 1. Define accounting standard.

Solution  1: Kohler has defined Accounting Standards as, “a code of conduct imposed on an accountant by custom, law and a professional body.”

Question 2. Give two points regarding the nature of accounting standards.

Solution  2: The two nature of accounting standards are:-

(i) Accounting standards tell us the accounting rules, principles, rules, concepts and guidelines of the process of recording transaction.

(ii) They promote better understanding of financial statements.

Question 3. Give two advantages of accounting standards.

Solution  3: The two advantages of accounting standards are:-

(i) Accounting standard make sure the regularity and comparability of financial statements.

(ii) If business is follow accounting standards it boosts the trust ability of financial statement.

Question 4. State the objectives of an accounting standard.

Solution  4: The main objectives of Accounting Standards are:-

1.) Minimise the diverse accounting policies and practices with an aim to eliminate them to the extent possible.

2.) Promote better understanding of financial statements.

3.) Understand Significant Accounting Policies adopted and applied.

4.) Facilitating meaningful comparison of financial statements of two or more entities.

5.) Enhancing reliability of financial statements.

Question 5. Define International Financial Reporting Standards (IFRS).

Solution  5: This term refers to the financial standards issued by International Accounting Standards Board (IASB). It is the process of improving the financial reporting internationally to help the participants in the various capital markets of the world and other users. IFRS rules are published by the International Accounting Standards Board (IASB). They designate how a business should manage and record their accounts.

Question 6. What are the two basic objectives of having an accounting standard?

Solution  6:

The two basic objectives of having an accounting standard are:-

1.) Minimise the diverse accounting policies and practices with an aim to eliminate them to the extent possible.

2.) Promote better understanding of financial statements.

Question 7. Why are accounting standard required?

Solution  7: Accounting standards is required to improve accuracy and uniformity in the accounting process.

Question 8. What is the full form of IFRS?

Solution  8: The full form of IFRS is the International Financial Reporting Standards.

Question 9. Which values are followed by adopting the accounting standards?

Solution  9: The values are followed by adopting accounting standards are:-

(i)   Clarity

(ii)  Consistency

(iii) Comparability

(iv) Reliability

Question 10. Why International Financial Reporting Standards (IFRS) is important.

Solution  10: Below the importance of IFRS:-

1) Globalised comparison of financial statements of companies is possible.

2) Accountants and auditors are in a position to render their services in countries adopting IFRS.

3) By using of IFRS accountants and auditors can save the time and money.

4) Firm using IFRS can have better planning and execution.