Account Ppt Ac Stds

8/4/2019 Account Ppt Ac Stds

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Indian AccountingStandards.

Group-3

Poonam

Farid kazi

Tausif kazi

BikiranSmriti

Mahaveer


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r g n o ccoun ngstandards.

Accounting polices:

Accounting is the art of recordingtransactions in the best mannerpossible, so as to enable the reader to

arrive at judgments/come toconclusions, and in this regard it isutmost necessary that there are setguidelines. These guidelines are

generally called accounting policies.


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The intricacies of accounting policiespermitted Companies to alter theiraccounting principles for their

benefit. In order to avoid the aboveand to have a harmonized accountingprinciple, Standards needed to be set

by recognized accounting bodies.This paved the way for AccountingStandards to come into existence.


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Origin of Indian accountingstandardsAccounting Standards in India are

issued By the Institute of CharteredAccountanst of India (ICAI). At

present there are 30 AccountingStandards issued by ICAI.

The institute of Chatered Accountants

of India, recognizing the need toharmonize the diversre accountingpolicies and practices, constituted at

Accounting Standard Board (ASB) on


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Why accountingstandards?Objective of Accounting Standards is

to standardize the diverse accountingpolicies and practices with a view to

eliminate to the extent possible thenon-comparability of financialstatements and the reliability to the

financial statements.


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Meaning of AccountingStandards

Sub Section(3A) to section 211 ofCompanies Act, 1956 requires thatevery Profit/Loss Account and

Balance Sheet shall comply with theAccounting Standards. 'AccountingStandards' means the standard of

accounting recomended by the ICAIand prescribed by the CentralGovernment in consultation with theNational Advisory Committee onAccountin Standards(NACAs)


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ypes o accoun ngstandards:

Disclosure of Accounting Policies:Accounting Policies refer to specificaccounting principles and the method

of applying those principles adoptedby the enterprises in preparation andpresentation of the financial

statements.

Valuation of Inventories: The

objective of this standard is to


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Cash Flow Statements: Cash flowstatement is additional information touser of financial statement. This

statement exhibits the flow ofincoming and outgoing cash. Thisstatement assesses the ability of the

enterprise to generate cash and toutilize the cash. This statement is oneof the tools for assessing the liquidityand solvency of the enterprise.


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Contigencies and Events occuringafter the balance sheet date: Inpreparing financial statement of a

particular enterprise, accounting isdone by following accrual basis ofaccounting and prudent accounting

policies to calculate the profit or lossfor the year and to recognize assetsand liabilities in balance sheet.


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Net Profit or Loss for the Period,Prior Period Items and change inAccounting Policies : The objective

of this accounting standard is toprescribe the criteria for certain itemsin the profit and loss account so that

comparability of the financialstatement can be enhanced. Profitand loss account being a periodstatement covers the items of theincome and ex enditure of the


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Depreciation Accounting :

It is a measure of wearing out,

consumption or other loss of value of adepreciable asset arising from use,passage of time. Depreciation isnothing but distribution of total cost of

asset over its useful life.


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Construction Contracts :

Accounting for long term

construction contracts involvesquestion as to when revenue shouldbe recognized and how to measurethe revenue in the books of

contractor.

As the period of constructioncontract is long. Therefore question

arises how the profit or loss of


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Revenue Recognition :

The standard explains as to when the

revenue should be recognized in profitand loss account and also states thecircumstances in which revenuerecognition can be postponed.

Types of revenue: Interest, dividend

and royalties.


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Accounting for Fixed Assets :

It is an asset, which is:- Held with

intention of being used for the purposeof producing or providing goods andservices. Not held for sale in thenormal course of business. Expected to

be used for more than one accountingperiod.


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The Effects of changes in ForeignExchange Rates :

Effect of Changes in ForeignExchange Rate shall be applicable inRespect of Accounting Periodcommencing on or after 01-04-2004

and is mandatory in nature.

Amount Exchange Difference


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Accounting for GovernmentGrants : Government Grants areassistance by the Govt. in the form of

cash or kind to an enterprise in returnfor past or future compliance withcertain conditions. Government

assistance, which cannot be valuedreasonably, is excluded from Govt.grants,. Those transactions withGovernment, which cannot bedistin uished from the normal tradin


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Accounting for Amalgamation :This accounting standard deals withaccounting to be made in books of

Transferee company in case ofamalgamation. This accountingstandard is not applicable to cases of

acquisition of shares when onecompany acquires / purchases theshare of another company.


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Employee Benefits :

Accounting Standard has been

revised by ICAI and is applicable inrespect of accounting periodscommencing on or after 1st April 2006.the scope of the accounting standard

has been enlarged, to includeaccounting for short-term employeebenefits and termination benefits.


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Borrowing Costs : Enterprises areborrowing the funds to acquire, buildand install the fixed assets and other

assets, these assets take time tomake them useable or saleable,therefore the enterprises incur the

interest (cost on borrowing) toacquire and build these assets. Theobjective of the Accounting Standardis to prescribe the treatment ofborrowin cost (interest + other cost)


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Segment Reporting :

An enterprise needs in multiple

products/services and operates indifferent geographical areas. Multipleproducts / services and theiroperations in different geographical

areas are exposed to different risksand returns.

Information about multiple products /

services and their operation in


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Related Paty Disclosure :

Sometimes business transactions

between related parties lose thefeature and character of the armslength transactions.

disclosure of related partytransaction is essential for properunderstanding of financialperformance and financial position of

enterprise.


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Accounting for leases : Lease is anarrangement by which the lessergives the right to use an asset for

given period of time to the lessee onrent. It involves two parties, a lessorand a lessee and an asset which is to

be leased.Earning Per Share :

Earning per share (EPS)is a financial

ratio that gives the information


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Consolidated FinancialStatements :

Consolidated profit/loss account andconsolidated balance sheet areprepared for disclosing the totalprofit/loss of the group and total assets

and liabilities of the group.

Accounting for Taxes on Income :This accounting standard prescribes

the accounting treatment for taxes


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Accounting for Investments inAssociates in consolidatedfinancial statements :

The accounting standard wasformulated with the objective to setout the principles and procedures for

recognizing the investment inassociates in the consolidated financialstatements of the investor.


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Discontinuing Operations :

The focus of the disclosure of the

Information is about the operationswhich the enterprise plans todiscontinue rather than disclosing onthe operations which are already

discontinued.

Intangible Assets : An IntangibleAsset is an Identifiable non-monetary

Asset without physical substance held


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Interim Financial Reporting(IFR) :

Interim financial reporting is thereporting for periods of less than ayear generally for a period of 3months. As per clause 41 of listing

agreement the companies are requiredto publish the financial results on aquarterly basis.


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Financial Reporting of Interest injoint ventures : Joint Venture isdefined as a contractual arrangement

whereby two or more parties carry onan economic activity under 'jointcontrol.

Joint control' is the contractuallyagreed sharing of control overeconomic activity.


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Provisions, Contingent LiabilitiesAnd Contingent Assets :

Provision for restructuring cost.

Liability: A liability is present

obligation of the enterprise arisingfrom past events the settlement ofwhich is expected to result in an

outflow from the enterprise of


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Financial Instrumentpresentation :

The objective of thisStandard is to establishprinciples for presentingfinancial instruments asliabilities or equity and for

offsetting financial assets and


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Financial Instruments,Disclosures and Limited revisionto accounting standards:

The objective of this Standard is torequire entities to provide disclosuresin their financial statements that

enable users to evaluate.

the significance of financialinstruments for the entitys financial

position and performance; and

Documents

Account Ppt Ac Stds