Accounting standards are formal guidelines that dictate how financial transactions and statements should be recorded and reported. These standards ensure consistency, transparency, and comparability in financial reporting, making it easier for stakeholders to understand a company's financial health. Different countries may have their own set of accounting standards, such as the Generally Accepted Accounting Principles (GAAP) in the United States and the International Financial Reporting Standards (IFRS) used in many other parts of the world. Adhering to these standards helps maintain trust and integrity in financial markets.