Editing Accounting standard (section)

{{Short description|Accounting standards for publicly traded companies}}
{{accounting}}
Publicly traded companies typically are subject to rigorous standards. Small and midsized businesses often follow more simplified standards, plus any specific disclosures required by their specific lenders and shareholders. Some firms operate on the [[cash method of accounting]] which can often be simple and straightforward. Larger firms most often operate on an [[Basis of accounting|accrual basis]]. Accrual basis is one of the fundamental accounting assumptions, and if it is followed by the company while preparing the financial statements, then no further disclosure is required. '''Accounting standards''' prescribe in considerable detail what accruals must be made, how the financial statements are to be presented, and what additional disclosures are required. The term ''generally accepted accounting principles'' (GAAP) was popularized in the late 1930s.<ref>{{cite web|url=https://www.sechistorical.org/museum/galleries/rca/rca02b-status-gaap.php |title=Accounting and Auditing in the 1930s - The Status of GAAP |publisher=The Richard C. Adkerson Gallery on the SEC Role in Accounting Standards Setting }}</ref>{{Better source needed|date=February 2025}}

Some important elements that accounting standards cover include identifying the exact entity which is reporting, discussing any "going concern" questions, specifying monetary units, and reporting time frames.<ref>{{cite web|last1=WiseGeek|title=What are the Generally Accepted Accounting Principles?|url=http://www.wisegeek.org/what-are-the-generally-accepted-accounting-principles.htm#|website=WiseGeek|access-date=9 February 2017}}</ref>

In the public sector, 30% of 165 governments surveyed used [[accrual accounting in the public sector | accrual accounting]], rather than cash accounting, in 2020.<ref name=IFACCIPFA>{{cite web | title=Global Public Sector Shift to Accrual Accounting Forecast to Continue | date=16 June 2021 | author=International Federation of Accountants | url=https://www.ifac.org/news-events/2021-06/global-public-sector-shift-accrual-accounting-forecast-continue }}</ref>