Accounting standard

Okay kiddo, so you know how when you play with your toys, you like to keep them in order so you can find them easily? Well, businesses also need to keep track of their toys, or in this case, their money, in a similar way.

The way they keep track of their money is by using something called accounting standards. Think of it like a set of rules that everyone agrees to follow when it comes to how they record and report their financial information.

These rules make sure that everyone is doing things the same way and that the information is accurate and easy to understand. Just like how you and your friends might agree to clean up your toys in the same way, businesses agree to follow the accounting standards so that everyone can understand their financial information.

The accounting standards are set by special groups that make sure all the rules make sense and are fair for everyone. These groups also review and update the rules as needed so they stay current.

So, in summary, accounting standards are rules that businesses follow to keep their financial information organized and accurate, just like how you keep your toys in order when you play.