The accounting standards have emerged on the accounting scene because of the problems created by the flexibility in accounting practices. At present, standards enable the accountant to apply those accounting practices which are most suitable in a given situation. The benefits of accounting standards may be summarized as:

The accounting information is used by many individuals or group of individuals including investors, creditors, trade unions and even the government agencies. It is therefore necessary that the financial statements, the final products of the accounting information, present a true and fair view of the final position and operating results of an accounting entity. The accounting standards create a sense of confidence amongst the users of the accounting information by providing a definite structure of uniform guidelines which provide credibility and reliability to the financial transactions are available, it becomes necessary to use the most suitable alternative uniformly by a particular firm of different firms is enhanced, if it can be compared easily in the same line of business activity. This comparability is possible only when definite rules framed in the form of various accounting standards are adopted in the compilation of accounting information.

In the changing environments, the public has to trust the accountants and auditors for the accounting and auditors for the accounting information they get for an accountant entity. Any type of misinformation can lead to stern action against the accountants as well as auditors. The auditors run the special risk for the undetected frauds and insufficient disclosure of vital accounting information. In such circumstances, the accounting profession felt the indispensability of the accounting standards so that uniform accounting practices and policies can mitigate the occurrence of frauds and provide transparency to the accounting data. For this purpose, the establishment of standards to which all chartered or certified accountants subscribe is useful. Hence the accounting standards benefit not only an accounting entity but the accountants and auditors too.

Accounting standards are useful in measuring the efficiency of the management regarding the profitability, liquidity, solvency and general progress of the enterprise. Accounting standards aim to ensure the consistency and comparability which in turn permit better comparisons in profitability, financial positions and future prospects of an accounting entity. In the absence of the accounting standards, it is difficult to evaluate the managerial stewardship because there is no basis of comparing the financial results of one enterprise with that of another. Each enterprise would evolve its own rules or standards to suit its purpose and users of the accounting information would fail to get a correct or true picture of the functioning of an enterprise. However, it must be ensured that the standard is not subject to manipulation because in that case the managers can conceal their actual performance under the pretext of reporting according to the well established accounting standards.

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