Based on this: Standard SettingLEARNING OBJECTIVE 2Explain the need for accounting standards and identify the major entities that influence standard setting and financial reporting.Need for StandardsAccounting standards help reduce the information asymmetry problem in financial reporting. They do this by requiring that transactions and events be recognized, measured, presented, and disclosed in a specific way. But the main controversy in financial reporting is this: Whose rules should we play by, and what should they be? The answer is not immediately clear. This is because the users of financial statements have both similar and conflicting needs for information of various types.Accounting professions in various countries have tried to develop a set of standards that are generally accepted and universally practised. Without these standards, each enterprise would have to develop its own standards, and readers of financial statements would have to become familiar with every company's particular accounting and reporting practices. It would be almost impossible to prepare statements that could be compared.This common set of standards and procedures is called generally accepted accounting principles (GAAP). The term "generally accepted" means either that an authoritative rule-making body in accounting has created a reporting principle in a particular area or that, over time, a specific practice has been accepted as appropriate because it is used universally.13 Although pri