Differentiate between accounting standards and accounting concepts.

The major differences between accounting standards and accounting concepts are as follows −

Accounting standards

• These are uniform rules which started in 1950s and are rigid in nature.

• Individuals, business firms should follow these standards.

• Its main objective is to correct measurements and disclosure.

• It creates more responsibilities.

• There are various accounting standards, some of them are AS 1 disclosure of accounting policies, AS 3 cash flow statements, AS 6 Depreciation accounting etc.

Accounting concepts

• There are various accounting concepts and they are customary and flexible in nature.

• It offers liberty to follow various methods.

• It is less responsible as compared to accounting standards.

• It is independent of evolving needs of investment community.

• Relevance, reliability, materiality, comparability, understandability, constraints of timeliness fall under accounting concepts.