Authoritative standards, capital markets and contracts Many of the accounting methods you are studying in this book are based on authoritative standards (such as AASB Statements), which attempt to specify how companies’ financial accounting should be done. Such standards don’t cover everything: companies must still make many choices when they are preparing their financial statements.

Why are there authoritative standards for companies to follow? Why don’t they cover everything? Should we have more or fewer of them? Situate your answer in the context of this chapter’s theories about information use.