The components of the accounting standards relate to the fundamental accounting concepts, the fixed assets as well as the stocks. The fundamentals of the accounting concepts deal with the aspects of consistency of the data over a period of time, the matching and the accruals concept by which the transactions are accredited to a specific time period and instance location, the prudence concept by which the income is not anticipated while the losses are treated as prudent costs and the concept that the business is to be kept in running order for a long period of time. Aside from this the nature and the recording and depreciating and appreciating procedure for the fixed assets is highlighted in the accounting standards as well as the management and accounting procedures for the stocks and the share of the company.
The accounting standards are required by business as it makes possible for the third party to access the accounts of the business and comprehend the data which is depicted there. Moreover the framework of the accounting standards allow the different business to match and compare their performance in terms of rations and profitability given that they adhere to the same set of accounting standards and policies. This enables the business to keep track of their competition as well as make specific strategies and relevant decision to improve their position in the market in terms of finance, market share, profitability and growth.