Accounting standards do not apply on:
Purely charitable organisations
Partnership firm
Company
Answers
Answer:
I think purely charitable organisations is the correct answer
Answer:
The answer is Company.
Explanation:
Accounting standards are a set of practices, principles and rules that need to be followed while doing accounting. It is applicable in almost all type of businesses, however, there are some exceptions.
Purely charitable organisations: Accounting standards do not apply on purely charitable organisations. This is because they do not have any kind of profit-making motive and are completely non-profit organisations. All the funds generated by them are used for the betterment of society and not for personal gains. Thus, accounting standards do not apply to them.
Partnership firm: Accounting standards do not apply to partnership firms as well. This is because a partnership firm is an agreement between two or more people to form a business. It is not a legal entity and thus, accounting standards do not apply to it. The partners of the firm are individually responsible for the profits and losses and thus, accounting standards do not apply to the firm.
Company: Accounting standards are applicable to companies. Companies are a legal entity and thus, they need to comply with the accounting standards. Companies are required to maintain proper books of accounts and prepare financial statements as per the accounting standards. The financial statements are then used to assess the performance of the business.
In conclusion, accounting standards do not apply to purely charitable organisations and partnership firms as they do not have any kind of profit-making motive.
However, companies need to comply with the accounting standards as they are a legal entity.
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