Accrual basis of accounting is better than cash basis of accounting due to following reasons:
(i) Accrual basis of accounting makes a clear-cut distinction between capital items and revenue items. It gives correct picture of operating results and financial position of the business.
(ii) Accrual basis of accounting ensures the recording of all revenues and expenses even if these are not received or paid. Thus, it gives a complete picture of the business.
(iii) Accrual basis is based on generally accepted accounting principles and is considered as systematic, scientific and reliable.
(iv) Accrual basis is mandatory in case of companies under the provisions of Companies Act.

Some business transactions have legal form according to their relevant law. The legal form may be different from the substance or the commercial reality. According to this principle, accounting treatment and presentation of business transactions in financial statements should be governed by their substance and not by their legal form. For example under hire purchase system, the hire purchaser becomes owner of the goods only when he pays the last installment. This is legal form. The substance of the hire purchase transaction is that it is a credit transaction and the goods sold is immediately delivered to the hire purchaser and for all practical purposes he is considered owner of the goods from the date of acquisition. Accounting books are prepared on the basis of substance. Thus, substance should always be preferred to the form.

Accounting data must be comparable. Financial analysts have to analyse and compare the performance and financial position of the various companies of the same industry. To make them comparable, it is necessary that all the companies of an industry must follow the common accounting policies and practices. Some of the industries may follow different accounting policies which may not be in accordance with the accepted accounting principles explained above. Following are few examples of industry practice:
(i)Banks and insurance companies in some countries report certain investment securities at market price (rather than cost or market price whichever is less) as these securities are traded frequently.
(ii) In agricultural industry, crops are often reported at market value because it is difficult to develop accurate cost figure on individual crops.

Due to increasing globalization, there is increasing cross-border flow of goods, services, capital and technology and the role of multinational corporations is increasing.
As a result of this, financial statements produced in one country are used in other countries more and more frequently. To enable cross-border investment, it is essential that investors understand the financial statements of different countries. This is possible only when a set of uniform and consistent accounting norms are adopted which
ensures transparency and comparability. The purpose of IFRS is to integrate domestic businesses with the global investor and financial community.

International Financial Reporting Standards (IFRS) refers to the pronouncements made by IASB as distinct from IAS to achieve standardization in financial reporting. IFRS are a principle-based framework and not rule based so that there is no language gap and barrier. The basic idea behind the IFRS is to standardize the diverse accounting policies and practices with a view to make financial statements globally comparable and reliable.

(i) International Accounting Standards have only a persuasive value and have no statutory force.
(ii) However, Indian Accounting Standards, in the initial years, were recommendatory.
(iii) During this period, Institute of Chartered Accountants gave wide publicity among the users and educated its members about the utility of accounting standards and the need for compliance with the disclosure requirements.
(iv) The accounting standards became mandatory. It became the duty of members of the institute to ensure that accounting standards are implemented in the presentation of financial statements.
(v)Any deviation from the accounting standards, have to be disclosed in the reports so that the users of the financial statements may be aware of such deviations.
(vi) According to the Companies Act, 2013, Profit & Loss Account and Balance Sheet of a company shall comply with the accounting standards. If the Profit and Loss Account & Balance Sheet of a company do not comply with the accounting standards, such companies shall disclose in its Profit and Loss Account and Balance Sheet (a) deviation from the accounting standards, (b) reasons for such deviation and (c)financial effect arising due to such deviation.

The procedure for formulation of accounting standards in India is designed :
(i)To ensure the participation of all those who are interested in the formulation and implementation of accounting standards. They determine the areas which need formulation of accounting standards.
(ii)Then, Accounting Standards Board (ASB)prepares Exposure Draft (ED) which is published in the professional journals and circulated to receive comments from the professional bodies, securities markets, regulatory agencies, etc.
(iii) After obtaining the views, suggestions and comments, Exposure Draft is suitably revised and is reissued as Accounting Standard. Accounting standards are mandatory.

According to Kohler, "Accounting Standard is a code of conduct imposed on the accountants by custom, law and a professional body."
Following points highlight the nature of accounting standards:
(i) Accounting standards are the norms of accounting policies and practices to be adopted by the accountants.
(ii) Accounting standards make accounting procedures universally acceptable by removing the diverse accounting practices and policies.
(ii) Accounting standards serve as a guide for solving one or more accounting problems.
(iv) Accounting standards provide the basis upon which financial statements are prepared.
(v) Accounting standards are codified principles to be followed by public accountants.

Accounting Standards are set of guidelines which are issued by accounting body of a country. The Institute of Chartered Accountants of India is the accounting body in case of India.
Advantages :
(i) It makes comparison of financial statement within or outside India easy.
(ii) It helps in auditing.

Business is a going concern; the owners cannot wait for a long period to know the results of their business as it may not serve the purpose of owners and other interested parties. The users of financial information need periodical reporting relating to the performance of the business. Normally, accounting period is one year. At present accounting year is a financiaI year, i.e., from 1^st April-31^st March established by law. The Companies Act requires yearly reports to be presented to shareholders and the Income Tax Act requires accounts for all business enterprises to be submitted annually.

Following are the exceptions of this rule :
(i) Long-term contracts: When a contract is for work which cannot be completed for a long period of time, the payments are received in installments on the basis of work completed and certified. In such cases, revenue is considered realised on some reasonable basis, normally in a proportion of work completed.
(ii) Ready market: Some goods have a ready market. For example: gold, silver, etc. In such cases revenue is considered recognised as soon as these are manufactured as these can be sold in the market easily
(iii) Uncertainty: When realisation of revenue is uncertain, revenue is not considered realised even when goods are delivered to customer. For example: sale of goods on installment basis or on hire purchase basis. In such cases, revenue is recognised purchase basis. In such cases, revenue is recognised installments.

Revenue may be defined as the income earned by selling goods or rendering services and added to the capital. Revenue is considered as being earned on the date at which it is realised, that is, the date when goods or services are furnished to the customers in exchange for cash or some other valuable consideration. For services, revenue is recognised in the period in which the services are rendered. For tangible products, revenue is recognised neither when a sale order is received, nor when a contract is signed, nor when goods are manufactured but rather when it is shipped or delivered to a customer.