The accounting standard is a set of guidelines that financial accountants must follow in the preparation and presentation of company income, expenses, assets and liabilities . This helps ensure that the treatment of these items is fair and just, thereby making the financial statements a reliable source for users. There are many types of accounting standards used around the world. More than 120 countries, including the European Union, Singapore, India, Taiwan, Australia and Canada, adopt International Financial Reporting Standards (IFRS), developed by the International Accounting Standard Board (IASB). This is a principles-based approach. On the other hand, the United States of America uses the generally accepted accounting principles (GAAP) developed by the Financial Accounting Standard Board (FASB), which are rules-based. Over the past decade, these two councils have worked together toward convergence. (1) Why did they take this approach? Why is it important to practice the same standards in all companies and countries? A uniform accounting standard is said to produce uniform financial information. This will ensure that all financial information will be processed and presented in the same way globally. The first benefit would be to improve the comparability of high-quality financial statements. For example, Company A wants to see where it stands by comparing it with other companies in the same industry in another region. If the company they want to do this with uses a different accounting standard, the comparison would be inaccurate due to the many distinctions between IFRS and GAAP. One of them may be the inventory valuation method, for which the last in, first out (LIFO) system is not permitted by IFRS. This difference in inventory value......middle of paper......it does not only depend on the standard used. According to Hail, Leuz, and Wysocki (2009), research shows that corporate reporting incentives and the implementation of the standard have an impact on the quality of the reports produced. Comparability of reports is difficult to achieve as long as companies benefit from different incentives. Works cited2) Hail, Leuz and Wysocki (2009). Global accounting convergence and potential adoption of IFRS by the United States: an analysis of economic and political factors. Page 5.3) Chris Dumont (2012). International Financial Reporting Standards: What You Need to Know.4) Grant Houston (2011). The disadvantages of harmonization of accounting standards.5) Diaconu (2007). Impact of globalization on international accounting harmonization.6) Charles, Ding, Xu (2010). Convergence of accounting standards and foreign direct investment.