An accounting standard is a document issued by a rule-setting body, stating the manner in which accounting transactions are to be recorded and reported. The entities that most commonly issue accounting standards are the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). When an organization follows accounting standards, its financial statements can then be audited by an outside auditor, which is a standard requirement by lenders, creditors, and investors.
Accounting standards cover a broad range of topics, including the following:
- General principles
- Broad transactions