Accounting like a field of study in its developmental process has evolved a theoretical framework consisting of concepts or principles over period of time. Such concepts enjoy a wide measure of support by the accounting profession. So that's why they are termed as Generally Accepted Accounting Principles (GAAP). Various concepts and their implications for business and information users were discussed earlier.
As the accounting principles are broad guidelines for common application, they allow a wide variety of methods and practices. The lack of uniformity in accounting practice makes this complicated to compare the financial reports of various companies. Moreover, the multiplicity of accounting practices makes this possible for management to conceal economic realities through selecting those alternative presentations of financial result that permit earnings to be manipulated. The financial statements prepared in such conditions, thus, may have limited usefulness for several users of information. This problem has been recognized all over the world and various professional bodies are engaged in the duty of standardizing accounting practices. There is a movement in the directions of consensus building even on the international level. These professional bodies, actually, first look at the practices used through practicing accountants they then try to obtain a refinement of those practices through a process of consensus. This is in this way that the theory of accounting is built. In India also, several headway has been made through establishing twenty eight standards for accounting practice.