Accounting standards consist of authoritative standards guiding financial reporting, ensuring clarity and uniformity in the financial statements of companies and organizations. These standards make it easier for stakeholders, like investors, analysts, and regulators, to understand and compare financial information across entities. For instance, the Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) are widely recognized accounting standards globally.

Adherence to accounting standards involves the proper recording, organization, and presentation of financial transactions. For example, these standards stipulate how revenues and expenses are recognized in the income statement or how assets are displayed on the balance sheet. This ensures that financial statements are both reliable and faithfully represent the entity's financial standing.

For example, if a company records its Depreciation according to an accounting standard, the methodology for calculating it will be consistent and aligned with recognized practices, thus enhancing the comparability of its financial results with others.